SIVA (or Simple IVA)

The SIVA (or Simple IVA) is soon to replace the IVA as the Government looks to update the Insolvency Act 1986 to cater for the rising number of non-business related insolvencies.

When IVA’s were introduced as part of the Insolvency Act 1986, it was intended they would serve as an alternative to bankruptcy for those with business debts.

Record levels of consumer debt and the heavy marketing of IVA’s has resulted in a most IVA’s being undertaken by non-business people. Therefore the government has started looking into improvements to make the IVA process more suited to the majority of people affected by it.

It is expected the current IVA system will remain for business debtors, but a two-tier system will be introduced for non-business debtors.

This two-tier system will be known as the Simple IVA (SIVA) with the tiers being divided according to level of debt.

SIVA 1

For debts under £25,000. Like the present IVA, success of an proposal depends on a 75% majority of creditors, by value of the debt, voting in favour.

SIVA 2

For Debts between £25,000 and £75,000. Success of an proposal depends on a 51% majority by value of the debt, voting in favour.

Introduction date for SIVAs

It is expected Simple IVA will be introduced some time in 2008, however exactly how they will operate will still not fully know.