What is a SIVA?

IVA's were designed to provide debt relief to debts generated as a result of business insolvency. In more recent years, the increase in consumer debt has led to many people becoming insolvent with non-business debts and seeking the legal protection offered within an IVA.

This increased activity has resulted in proposals to restructure the current IVA legislation in order to address shortcomings within the current IVA format. The Insolvency Service set up a Working Party of stakeholders to discuss and consider how and what improvements should be made to balance the needs of both the creditor and debtor. This consultation process resulted in the proposal for an introduction of an enhanced IVA regime to build upon the current legislation.

The consultation eventually proposed that the current IVA structure should remain to cater for 'business trader' debts and more complicated cases. However, the need for a two tier Simple IVA (SIVA) mechanism has been outlined.

Within an SIVA an individual with debts of less than ?25,000/?30,000 would be eligible for a Simple IVA 1 (SIVA 1). With this level of debt an individual would be able to enter into this arrangement without the creditors voting on the proposal so long as the return in the SIVA 1 would be better than if the person went banrupt.

The SIVA 2 arrangement would cater for individuals with debts of ?25,000/?30,000 but not higher than ?75,000. In this situation an individual's creditors would be able to vote for or against the proposal but wouldn't be able to attach any additional modifications to the arrangement. The acceptance of the SIVA 2 would be based on a simple majority of debt vote as opposed to the current IVA requirement of 75%.