The government has outlined plans to overhaul individual voluntary arrangements, requiring fewer court papers to be filed, as such arrangements surge in popularity.

The Insolvency Service has come up with plans to streamline the process. The agency originally released two different proposals for a ‘simple’ IVA, now whittled down to one and in its final period of consultation.

The simple IVA, or SIVA, is the central part of the agency’s plan to speed up processes, saving costs for insolvency practitioners and giving better returns to creditors.

The agency proposes that the SIVA will be for liabilities of less than £75,000. Creditors will have to attend fewer face-to-face meetings and will not be able to suggest modifications to the debtor’s proposal. A majority of creditors, rather than 75%, will make decisions.

A SIVA will, crucially for practitioners, have simpler reporting requirements and no filing of routine papers to court. Creditors will have to make claims within 90 days.

The Insolvency Service estimates that as many as 80% of IVAs in 2005 would have fallen into the SIVA regime.

The Insolvency Practitioners Association welcomes the gist of the proposals, but warns that there is still much work to do to make sure the banks are kept onside.

IPA policy chief Peter Joyce says two issues must be ‘squared off’: simplifying the insolvency processes in tandem with reducing barriers for individuals to administer insolvencies through ‘insolvency-lite’.

Joyce warns that making it easier for debtors to enter insolvency will not be looked upon kindly by banks if they are concerned about the level of qualifications required for individuals to manage insolvencies.

‘We think IVAs are good, and SIVAs potentially good, but we don’t want to run into opposition. Whether creditors in the present climate turn their face against these proposals, there’s the risk debtors will have to use the more complicated [IVA] procedures or face bankruptcy,’ said Joyce.