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What Is IVA
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Information About IVAs
Nobody wants to deal with mounting debt, face the possibility of losing their home, have their accounts sent to a collections agency or have to worry about where funds for debt payments will be coming from. However, this happens to thousands of people on a yearly basis. Why? It is a combination of borrowing more than you can actually afford to pay due to the convenience of using credit cards. Job loss, marriage break ups, unnecessary purchases, piling up of interest rates or late fees and a simple case of making bad financial decisions are among the main causes of mounting debt.
What are you supposed to do if you find yourself in such situation? First, you can look for a debt management company who can create a debt management plan for you. For this, a credit counsellor will be assessing your current financial situation. Calculations will be made for the amount of debt payment that you can afford with all the non-secured debts that you have. Then, the credit counsellor will be the one to negotiate with your creditors so that lower monthly fees can be imposed on your debts.
Your second option in the UK, which is more suitable for serious debts, is the Individual Voluntary Agreement or IVA. Read on to find out more information on IVA and when you are qualified to apply for it.
Information On IVA: A Brief Background
The Individual Voluntary Agreement was born out of the Insolvency Act of 1986. This was introduced by the United Kingdom government as an alternative for bankruptcy and the target was small business owners. Through it, their debts can be written off but still partially paid, through affordable lower monthly fees.
Over the years, they way IVAs are used has changed enough so that it is made suitable for private individuals who are looking for a way out of their debts. If you have more debt than what you can actually afford to pay, you should exhaust all your options first prior to filing for bankruptcy, which is where the individual voluntary arrangement comes in.
Once the IVA is in place, anything up to 75% of your debts can be written off, any legal action about to be taken by your creditors on your account can be frozen, added interest rates or late fees will not be charged on your account, and you will be given a much lower monthly rate to pay off your debts. If your home is about to be foreclosed, this can also be legally stopped one the IVA is in place.
Who Is Eligible for the IVA?
To find out whether you are eligible for the IVA, here is a quick list of the requirements:
- You should have acquired more than £15,000 in debt with three or more creditors.
- You should have a steady source of income, most of which are not received through benefits.
- You should have the ability to repay at least 25% of your total debt.
These conditions are applicable for your unsecured debts only. For the last condition, you need to have a steady income that provides you with enough money after paying your essential bills to make a reasonable payment towards your debts and the costs of the IVA. These costs are the fees charged by the Insolvency Practitioner. This is an individual who you can get in touch with to start the IVA application process for you. Since each debtor owes different amounts to a number of creditors, the monthly payment to the IVA greatly varies.
Information On IVA: Dealing With Its Aftermath
The usual period by which an IVA is in place is five years. During this time, you may not be allowed to open new credit accounts or even use your credit card, so you have to live by relying on cash spending. If you want to truly become debt free, it is advisable to stick by the agreement of the IVA, otherwise you may be forced to file for bankruptcy. Just keep in mind that the effort will be well worth it so that you can be free of debt after the period that the IVA is in place, and have a fresh start when it comes to your finances.
To see if you are eligible for an IVA or other form of debt help, just complete the Online Form below and an experienced debt advisor from our recommended debt management company will get straight back to you.
See If You Are Eligible For An IVA Now By Completing The Form Below
A debt advisor will contact you to go through your situation to see if an IVA would be right for you
Your home may be repossessed if you do not keep up repayments on a mortgage, loan or any other debt secured on it. Think carefully before securing other debts against your home.