Business Individual Voluntary Agreement

Business Individual Voluntary Agreement

The need for a business individual voluntary agreement generally arises as soon as a business finds that it is not in a position to pay off its debts when they become due. When a business is not able to pay off its debts, it is considered insolvent and the procedures in this regard (insolvency) vary from one part of the world to another. However, all insolvency related procedures give the debtor a chance to find a suitable solution to their debt problems and these procedures also provide protection to the debtor from their creditors.

Individual voluntary agreement –different procedures

In the UK, depending on how much money a business owes (and cannot pay back) there are different bankruptcy procedures that will apply. However, when the business owner owes more than fifteen thousand pounds to at least three different creditors and it can easily pay up to two hundred pounds per month then the business can think of using a business individual voluntary agreement. However, this plan is not very cheap and can in fact be quite expensive.

Avoid filing for bankruptcy

A business individual voluntary agreement helps the business owner avoid having to file for bankruptcy and at the same time offers them an excellent opportunity to be free of their debts. The business individual voluntary agreement is an agreement that is formal and legally binding and it exists between the debtor and their creditors and involves an undertaking by the debtor to make certain monthly payments or realize some of their assets or even both. In this way the business individual voluntary agreement helps the debtor in making a full and final debt settlement with their creditors.

Benefit from entering into such an agreement

A business owner that has debts of fifteen thousand pounds and more will definitely benefit from entering into a business individual voluntary agreement. The same is the case for those business owners whose debts are long standing and there does not seem to be any hope of these debts being cleared. A business individual voluntary agreement also works well for a company that has a handful of creditors and also needs some assistance in clearing off its business debts.

In fact, the business individual voluntary agreement works well in situations when there is a small likelihood that a damaging court case will be instituted against the business by a creditor. The fact of the matter is that a business that does not have too many creditors will want to buy some time and if there is no immediate threat of any legal action by creditors, then they can use a business individual voluntary agreement to solve their problems.

By entering into a business individual voluntary agreement, the business can continue to maintain good relationships with its creditor. It will also help to keep its credit rating from being adversely affected and the amount of money to be paid as professional fees will also be considerably lower. The bottom line is that a business individual voluntary agreement is really an agreement that the insolvent company enters into with its creditors and is very useful to tide over temporary problems with cash flows.

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