A Guide To Individual Voluntary Arrangements
If your debt has grown beyond your control, an Individual Voluntary Arrangement, or IVA, could be the solution that saves you from bankruptcy.
While there are advantages with an IVA, there are many disadvantages as well, so it's best to investigate all of your options carefully before deciding on a plan.
To qualify for an IVA, you must be at least £15,000 in debt and you must have a regular income.
If your income doesn't leave anything left over after your essential monthly bills, bankruptcy may be the better option.
An IVA is a legally binding agreement arranged through an insolvency practitioner between you and your creditors, and can last for up to five years.
The insolvency practitioner will meet with your creditors and create a plan for your unsecured debt repayment.
It is possible that the practitioner can get your creditors to agree to a plan that could erase up to 75% of your debt if more that 75% of your creditors will agree to the plan.
Your insolvency practitioner will make the financial arrangements with your creditors, and will likely have to haggle to reach mutually agreeable terms.
If the IVA is approved, you then make one monthly payment that will be split between your creditors.
A portion of your monthly payment will also go to pay the insolvency practitioner's fees.
An IVA can have many advantages.
You do not risk losing assets like your home during an IVA, your debt can be considerably lowered, interest charges cease, and it is usually less expensive than a bankruptcy.
Payments you make toward your debt are determined by your income and can change with it.
However, just like bankruptcy, an IVA will stay on your credit file for six years.
Unlike bankruptcy, a debtor in an IVA can legally obtain credit if a lender will give it.
The disadvantages are that setting up and IVA through an insolvency practitioner is expensive, and other than bankruptcy, most other forms of debt solution cost less.
Having your finances closely scrutinized for such a long period can also be difficult.
Any extra income that comes your way will have to go toward your payments, including employment bonuses, tax repayment, and any inheritance.
You will find yourself having to explain any unusual financial activity to your insolvency practitioner.
If you fail the agreement, your only option may be bankruptcy.
While there are advantages with an IVA, there are many disadvantages as well, so it's best to investigate all of your options carefully before deciding on a plan.
To qualify for an IVA, you must be at least £15,000 in debt and you must have a regular income.
If your income doesn't leave anything left over after your essential monthly bills, bankruptcy may be the better option.
An IVA is a legally binding agreement arranged through an insolvency practitioner between you and your creditors, and can last for up to five years.
The insolvency practitioner will meet with your creditors and create a plan for your unsecured debt repayment.
It is possible that the practitioner can get your creditors to agree to a plan that could erase up to 75% of your debt if more that 75% of your creditors will agree to the plan.
Your insolvency practitioner will make the financial arrangements with your creditors, and will likely have to haggle to reach mutually agreeable terms.
If the IVA is approved, you then make one monthly payment that will be split between your creditors.
A portion of your monthly payment will also go to pay the insolvency practitioner's fees.
An IVA can have many advantages.
You do not risk losing assets like your home during an IVA, your debt can be considerably lowered, interest charges cease, and it is usually less expensive than a bankruptcy.
Payments you make toward your debt are determined by your income and can change with it.
However, just like bankruptcy, an IVA will stay on your credit file for six years.
Unlike bankruptcy, a debtor in an IVA can legally obtain credit if a lender will give it.
The disadvantages are that setting up and IVA through an insolvency practitioner is expensive, and other than bankruptcy, most other forms of debt solution cost less.
Having your finances closely scrutinized for such a long period can also be difficult.
Any extra income that comes your way will have to go toward your payments, including employment bonuses, tax repayment, and any inheritance.
You will find yourself having to explain any unusual financial activity to your insolvency practitioner.
If you fail the agreement, your only option may be bankruptcy.
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