Causes of Early Failures in Individual Voluntary Arrangements

56 Pages Posted: 24 Apr 2009

Date Written: March 31, 2008


Consumer over-indebtedness is a topical and growing problem and Individual Voluntary Arrangements (IVA) are becoming the preferred solution for consumer debtors. When successfully completed, an IVA provides permanent debt relief and an opportunity for an individual to have a new start, but when these arrangements fail the individuals find themselves in a worse financial situation often with no alternative other than bankruptcy. The Insolvency Service (IS) only publishes very limited data on the procedure and there has been limited research into the process.

This project has provided the first data from a debtor’s perspective. The findings on the initial advice process provide evidence of the importance of face-to-face meetings and the need for the regulators to reinforce rather than weaken best practice guidelines to improve quality and consistency. The breakdown in the relationship between Insolvency Practitioners (IPs) and creditors has caused a power struggle resulting in restrictive terms being forced on debtors, and finally the lack of an agreed approach for failed arrangements. The introduction of an agreed protocol in February 2008 will go some way to alleviating these problems. Further research is needed into the causes of IVA failure and follow-on projects are suggested. Due to the technical nature of this project a glossary of terms is set out on the next page.

Keywords: Individual Voluntary Arrangement, Personal Insolvency, Insolvency, Consumer Debt, Credit, Bankruptcy, Over-indebtedness, Personal Bankruptcy Law, Creditor, Personal Debt Management

Suggested Citation

Morgan, Susan, Causes of Early Failures in Individual Voluntary Arrangements (March 31, 2008). Available at SSRN: or

Susan Morgan (Contact Author)

Kingston Law School ( email )

United Kingdom

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