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What Is An IVA?
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What Is An Individual Voluntary Arrangement?
Do you feel like your debt problems have reached crisis point? Over the years, more and more people are falling under the debt trap where they borrow more than they can actually afford to repay. Blame it on the easy accessibility of credit cards, but swiping that piece of plastic instead of having to take cash out of your wallet is really tempting. Before you know it, you have bitten of more than you can chew and are well out of your depth. In the following sections, we will learn more about a particular solution that you can use if you unfortunately find yourself one step away from filing for bankruptcy as a result of mounting debt.
What Is An IVA And How Does It Work?
In the United Kingdom, there is one solution that you may be eligible for called the IVA, if you find yourself having more debt than you can handle. IVA stands for Individual Voluntary Agreement. Born from the Insolvency Act of 1986 in the UK, the goal of this formal agreement is to clear an individual from his or her debts, as witnessed by the creditor.
Originally, the Insolvency Act was meant to help small business owners. It was taken as an alternative when small-scale entrepreneurs needed to file for bankruptcy. Instead of filing for bankruptcy, what the government did was introduce the IVA program where anything up to 75% of your unsecured debts can be written off. Today, the IVA is primarily used not for small business owners but for private individuals.
Will The IVA Benefit You As A Debtor?
Next, does the IVA benefit the debtor or the creditor? From the perspective of the debtor which is you, the most important aspect of filing for IVA is that the debts that you cannot afford to repay can be written off. You would not have to deal with harassing phone calls from creditors any more, the amount of monthly payments for your debt can be reduced, you only need to pay back what you can afford and you may put a legal stop to your home being foreclosed or prevent yourself from losing any valuable property that you may have. These are the benefits of the IVA for you as a debtor.
How Much Does An IVA Cost?
When considering this type of an agreement as a debt solution, you need to know what the cost of IVA is, because all debt solutions have some costs attached. IVAs are quite expensive to set up and the fees will normally be taken out of the monthly payments that you make into the arrangement. This should all be explained to you before you sign anything.
The number one thing that you need to remember is that it is a better alternative to bankruptcy, but it will still have a negative effect on your credit rating. If bankruptcies can stay on your financial records for up to ten years, the cost of IVA filing is for it to stay on your record for six years from the start of filing. The main rule for setting up these arrangements is that you should have acquired more than £15,000 in debt with at least three different creditors. The agreement also stipulates a certain amount that should be your disposable income, otherwise you will not be able to afford to keep up with the monthly payments.
How Do I Apply for an IVA?
Now that you already have an idea about the cost of IVA, how do you actually apply for one? The first step is incredibly easy. You need to find out if you are eligible for an IVA so you must first submit a form (such as the one at the bottom of this page) with your details to a debt management company or insolvency practitioner. They will then get in touch and run through your finances, then tell you whether you qualify for an IVA. Even if you do not, you may still be eligible for a debt management plan. Once you are offered an IVA and you agree to it, the rest of the process is dealt with by your insolvency practitioner.
After obtaining your application form, a proposal is submitted to court so that an Interim Order can be obtained. Once approved, the Interim Order issued by the court will stop creditors from taking any action against you. A meeting is set up with your creditors to see whether or not the proposals are acceptable to them, after which the acceptance or the IVA may ensue.
When dealing with debt problems, it definitely pays to learn about how the application process works and how you can decide whether it is the right financial decision for you or not. Once you determine that applying for IVA is the best course of action to take, all you need to do is apply for debt help using our form below. Once you click on Submit, the form will be forwarded to one of the UK’s leading Insolvency Practitioners.
The minute that the IVA is in place, you can start getting back on your feet financially and hopefully not fall into the same debt trap in the future.
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
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