Contents
About this guide
What is an FTVA?
What happens to the bankruptcy order made against me?
How does an FTVA differ from an individual voluntary arrangement (IVA)
How does an FTVA work?
Who can enter into an FTVA?
How much will an FTVA cost me?
What should I do if I want to propose an FTVA?
What happens if the official receiver does not agree to act as nominee?
What happens once the official receiver is nominee?
How long will the FTVA last?
What happens if I do not comply with the terms of the FTVA.
How can I find out more?
About this guide
This guide explains what to do if you are bankrupt and wish to enter into a fast-track voluntary arrangement(FTVA).
What is an FTVA?
An FTVA is a binding agreement with yourcreditors to pay all or part of the money you owethem. You can only enter into an FTVA after youhave been made bankrupt, and before you have been discharged from your bankruptcy. In an FTVA youprepare a proposal to put to your creditors andsend it to the official receiver. If the officialreceiver thinks your proposal has a reasonablechance of being accepted by your creditors andof being implemented, they will tell you that theyagree to act as your nominee and will put yourproposal to your creditors. If your creditorsaccept your proposal the official receiver will thenact as your supervisor, looking after thearrangement and making payments to yourcreditors in accordance with your proposal.
What happens to the bankruptcy order made against me?
Once your creditors have approved the FTVA, theofficial receiver will apply to court for thebankruptcy order to be annulled. (‘Annulled’means cancelled, as if it had never existed.) Thiswill usually happen about 5-7 weeks after theFTVA has started. Once the bankruptcy order hasbeen annulled, you will no longer be subject toany of the bankruptcy restrictions, and if anyassets (such as your home) were not included inyour FTVA for distribution to your creditors, thesewill be returned to you. The official receiver willtell anyone they notified of the bankruptcy orderthat you are no longer bankrupt. Details of yourbankruptcy will be removed from the individualinsolvency register.
How does an FTVA differ from an individual voluntary arrangement (IVA)
An IVA is also a procedure by which you canreach a legally binding agreement with yourcreditors to pay all or part of your debts, but thenominee and supervisor must be an insolvencypractitioner. You can enter into an IVA afterbankruptcy, but it is more often used as a way ofavoiding bankruptcy.
Insolvency practitioners' charges vary, but theyare usually accountants or solicitors and their feeswill be similar to those they charge for other kindsof work.
How does an FTVA work?
You must draw up a proposal to your creditors topay part or all of your debts. The proposal mustcontain:
- details of your debts;
- the assets available to be sold;
- payments you are willing to make to yourcreditors;
- how long you will take to make these payments;
- details of the fees and costs of administeringthe FTVA.
The official receiver, as nominee, will put yourproposal to your creditors so that they can voteon whether or not to accept it. If they accept it,the agreement is binding and prevents themtaking legal action against you to enforce theirdebts. You, in turn, must deliver up the assets andmake the payments offered in your proposal.
You commit a criminal offence if you make anyfalse statement or fraudulently do or omit to doanything to get your creditors' approval of yourFTVA.
Who can enter into an FTVA?
You can enter an FTVA only if you have beenmade bankrupt, and before you have been discharged from your bankruptcy. The procedure is designed to deal only with straightforward sales or disposalsof assets and the collection of regular payments.So if you have a lot of assets to be sold an FTVAis probably not for you.
The official receiver will consent to act assupervisor only if your FTVA proposal will providea return to creditors significantly better than theywould have received in your bankruptcy. So, ifyou wish to propose an FTVA, you must offer yourcreditors something extra. For example, youmight offer money from a third party or paymentsfrom your income for longer than you would inyour bankruptcy; that is, for more than 3 years.
How much will an FTVA cost me?
The official receiver charges a fixed fee of £300for acting as nominee, which you must pay at thetime you submit your proposal. If the officialreceiver declines to act as nominee, the fee willbe credited to your bankruptcy estate and may bereturned to you later. In all other circumstancesthis fee is non-refundable. If your creditors acceptyour proposal, the official receiver's fee for
acting as supervisor will be 15% of the amountraised from the sale of assets and/or collectedfrom you.
Before any money is distributed to your creditors,half the case administration fee charged by theofficial receiver to deal with your bankruptcy(£857.50) will be recovered from the moneycollected. Also, if you were made bankrupt on thepetition of one of your creditors, you must repaytheir costs.
In addition, there is a fee of £15 for registering theFTVA with the Secretary of State, which meansthat details of your FTVA will be entered on theindividual insolvency register. This is also payableat the time you submit your proposal. If the officialreceiver declines to act as nominee or if yourproposal is not accepted by your creditors, thisfee will be credited to your bankruptcy estate andmay be returned to you later.
What should I do if I want to propose an FTVA?
You should tell a member of the official receiver'sstaff - this might be during your bankruptcyinterview or at a later date but before you have been discharged from your bankruptcy. You will be given orsent some forms to complete. When completed,these forms will represent your proposal. They willinclude several standard terms and conditionsand will already show details of the assets anddebts that you told the official receiver about. Youshould provide whatever extra information theforms ask for and return them to the officialreceiver with the required fee. If you would likeguidance on completing your FTVA proposal, thenyou should contact the official receiver. You canobtain a copy of the FTVA proposal on ourwebsite or from the official receiver.
Once the official receiver has received thecompleted proposal forms and the fee they willexamine your proposal and decide whether to actas nominee. They may ask you to provide moreinformation to help them make that decision.
What happens if the official receiver does not agree to act as nominee?
Only the official receiver can agree to act asnominee in an FTVA, but they do not have toagree to do so. They will agree to act only if theybelieve your proposal has a reasonable chanceof being accepted by your creditors andimplemented. They will not agree to act if youraffairs are complicated.
If the official receiver declines to act as nomineeyou may, if you wish, consult an insolvencypractitioner to see if they will act as nominee inan IVA.
Otherwise, the official receiver will continue withyour bankruptcy proceedings. Our publication‘Guide to Bankruptcy’ can give you further information.
What happens once the official receiver is nominee?
The official receiver will send a copy of yourproposal to each of your creditors so that theymay vote on whether to accept it. Creditors whoreceive notice of your proposal will be bound bythe FTVA. If you do not name a particularcreditor, that creditor would be able to apply forthe FTVA to be revoked once they became awareof it. So it is very important to make sure youhave told the official receiver about everyone youowe money to.
For the FTVA to be accepted, 75% or more in value ofthose who vote, must agree to the proposal.After that, the official receiverbecomessupervisor of the FTVA and is responsible forrealising (selling) the assets, collecting payments dueunder the arrangement, and then paying thatmoney to your creditors. You must co-operate inhelping the supervisor to realise your assets andby making the agreed payments.
How long will the FTVA last?
There is no set time for an FTVA - the durationwill normally be set out in the proposal. Forexample, you may offer to make regularpayments from your income for a set number ofyears. If your proposal is based on the paymentof a lump sum by a third party or the sale ofassets, the FTVA will last until the supervisor hascollected in the money or sold the assets anddistributed the proceeds to your creditors.
What happens if I do not comply with the terms of the FTVA.
If you do not deliver up any assets included in theproposal or keep up the agreed payments, theFTVA will fail. If you have deliberately notcomplied with the terms of the arrangement, butare still able to make payments, the officialreceiver will make you bankrupt again.If the failure is not your fault, for examplebecause you have been made redundant, theofficial receiver will terminate the FTVA, but willtake no further action. However, your creditorswill then be able to take action against you torecover the full amount you owe them, includingpetitioning for your bankruptcy.
How can I find out more?
This publication is for general guidance only. If youhave further questions about the proceduresinvolved in proposing an FTVA, you should askyour professional adviser or the trustee handlingyour bankruptcy.
Please note that The Insolvency Service andofficial receivers cannot give legal or financialadvice. You should seek this from a solicitor, aqualified accountant, an authorised insolvencypractitioner or a reputable financial adviser oradvice centre.
For general enquiries on insolvency, you can contact The insolvency Enquiry Line 0845 602 9848available Monday to Friday 8am to 5pm (except bank holidays)Or e-mail
Further information about bankruptcy is availablein the following Insolvency Service publications that are available on our website
- Guide To Bankruptcy
- Can my bankruptcy be cancelled? Information on the annulment of a bankruptcy order.
You can obtain further copies of this, and other publications from The Insolvency Servicewebsite:
This publication provides general information only. Every effort has been made to ensure that the information is accurate, but it is not a full and authoritative statement of the law and you should not rely on it as such. The Insolvency Service cannot accept any responsibility for any errors or omissions as a result of negligence or otherwise.
© Crown copyright 2012
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November 2012 - URN 12/1317