The expected introduction of the SIVA (Simple IVA or Simplified IVA) was yesterday abandoned by the Insolvency Service.

The Simple IVA was expected to make IVA’s accessible to more people struggling with debts (especially those with lower debts) and also help creditors by simplifying the process and reducing Insolvency Practitioner fees.

IVA’s would have also been accepted if just 51% voted in favour rather than the current requirement of over 75%. This would have stopped some creditors from continuing their practice of historically blocking any IVA where they had 25% or more of the debt (i.e. their NO vote could stop the IVA being accepted).

The Insolvency Service said they dropped plans to introduce a Simple IVA because IVA’s had recently developed into a more streamlined process making the need redundant.

David Kerr, chief executive of the Insolvency Practitioners Association (IPA), was quoted in the Times as saying “The SIVA scheme would have made it more difficult for creditors to defeat reasonable proposals for repayment by setting arbitrary minimum levels of return which take no account of debtors’ circumstances and ability to pay.

“Certain creditors are still insisting on receiving more than debtors can afford to pay in some cases, resulting in proposals being rejected even where the creditor represents only 25 per cent of the debts. That can be in nobody’s interest.”

There are also now concerns that the Insolvency Service will also shelf plans to authorise Voluntary Arrangement Practitioners (a more simple qualification where the Practitioner would not need to qualify for Corporate Insolvency). These plans would have enabled more accountants to administer IVA’s and increased competition could only have benefited people in terms of more accessibility to advice and lower fees.

If you are struggling with debts and would like to know how an IVA could help you please call for a FREE IVA review on 0800 0483 651.

An IVA can lead to a substantial part of your debt being written-off but will affect your credit rating for 6 years. You are normally also required to release any equity in your property (if you own your own home) but an IVA can safeguard your Home.