An IVA to help the Duchess of York?

An individual voluntary arrangement (IVA) could be a viable solution for the Duchess of York as she battles with debt, it has been suggested.

In the ClearDebt blog, Nazma Noor looked into the possibility of Sarah Ferguson taking out the option in an attempt to stave off bankruptcy because of business debts.

An IVA would allow the public figure to form an arrangement with whom she owes money, based on her income and outgoings.

The two parties would decide how much she can afford to pay back over a set period of time, before the cash owed is written off.

A full analysis on the amount of debts owed would be the first step involved in an IVA.

This includes an assessment of assets, such as property and cars.

And ClearDebt advised people to include their most valuable personal belongings in this process.

This is because the items would need to be sold by the Official Receiver if the person is made bankrupt.

Moreover, an honest and full disclosure of goods is a legal requirement as part of an IVA and a proposal for such an agreement would not be supported if a creditor was to learn not all expensive assets had been included.

A payment plan would have to be approved by 75 per cent of Ms Ferguson’s creditors, who would vote on the feasibility of the contract.

Her separate debt repayments would be merged into one payment if all sides agree and interest on the money owed would be frozen.

Recent reports estimated the Duchess of York to be around £5 million in the red.

By James Francis