Can the Self-Employed do an IVA?
Yes - You can do an IVA if you are self-employed.
The pressures of self-employment
Being self-employed is one of the most rewarding experiences a person can have.
There's nothing quite as rewarding as establishing a profitable business and dealing with the day to day challenges of making it a success.
But the financial pressure that comes with being self-employed can be extreme and, when circumstances conspire against you, it can be all too easy to find yourself facing financial difficulties.
Cash flow is incredibly important to any size business, but never more so than to a self-employed sole trader.
When trade slows and turnover drops, the financial pressures can increase very quickly and, as every self-employed person knows, the business's expenses will still need to be met, irrespective of trading conditions. The simple truth is, it's down to the business's owner to keep everything covered.
Business debts and personal debts
For the sole trader, business debts are also 'personal' debts because, in the eyes of the law, they are one and the same thing.
Which means that any credit facilities being used by a business, such as a business overdraft, a business credit card or a business loan are actually debts of the business owner.
Getting help through an IVA
If you have reached the point where you are no longer able to afford the monthly repayments to your debt, then you could find an IVA has the power to help you.
An IVA could help by relieving you of your normal monthly debt repayments and, instead, replacing them with a single repayment based on affordability.
As with all IVAs, the payments are made for a predetermined 'fixed' term of, normally, 5 years afterwhich any remain unpaid debt is written off.
Whilst entering an IVA will damage your credit rating, it will not affect your ability to trade.
Creditors will tend to support an IVA application from someone who is self-employed, particularly when their business remains viable when the burden of debt repayments has been removed.
This is, in part, due to the fact that an IVA generally recovers more of the outstanding debt than creditors would otherwise recover through that same trader's bankruptcy.
So, when an IVA proves itself to be the best the solution it delivers the best outcome for both the trader and their creditors.
Self-employed IVA summary
An IVA can provide a sole trader with an opportunity to reach an amicable agreement with their creditors, to repay the debt they can afford, whilst enabling them to protect their business interests and to continue trading.
Payments into an IVA are based on affordability, which can help relieve financial pressure on the business's cash flow.
The IVA payments fixed to a predetermined term of, normally, 5 years.
The new agreement replaces all existing contractual obligations to the unsecured debts owed by the business owner, including any business-related loans, credit cards and overdrafts.
Would you like to talk to someone?
For a confidential chat about all your options please call 0800 856 8569