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IVAs
What is an IVA?
The IVA (individual voluntary arrangement) was introduced as an alternative to bankruptcy by the government in 1986.
An IVA enables individuals facing serious debt to make a proposal to their creditors to reach a settlement.
If the IVA proposal is approved by 75% of the creditors, then the IVA acts as a contract that binds all parties and prevents any further action.
A standard IVA will offer to pay a percentage of the debt based on what the debtor can afford. The re-payment is made monthly into a fund over a five year period, until the debt is cleared.
With an IVA:
- Interest on the loan is frozen
- Creditors can not bring bankruptcy proceeding against the debtor
- The overall debt is reduced
Why an IVA May be the Answer to Your Debt Problems?
Unlike with bankruptcy, taking out an IVA does not incur any long term disadvantages.
An IVA enables you to pay back your debt in a way that is affordable and even allows you to reduce the overall amount.
Once the IVA has been paid off, your debt is deemed to be cleared and you can make a fresh start.
What are the Advantages of an IVA?
- With an IVA you only pay back a percentage of your debts (sometimes as much as 75% of your debt is written off)
- You only have to make one monthly payment or in some cases, a one-off lump sum
- The IVA is legally binding which means that your creditors cannot change their minds once they have agreed to it
- Once the IVA is in place your creditors cannot bring any other action against you as long as you maintain your agreed monthly payment
- You are able to operate a 'normal' bank account as long as it does not have an overdraft facility
- There won't be any negative publicity in the local papers
- An IVA may enable you to safeguard your property
- Having an IVA does not affect the ability to hold public office
- An IVA does not affect your professional status
- Taking out an IVA allows you to avoid bankruptcy
Who Might Benefit From an IVA?
An IVA can help anyone experiencing debt problems- particularly those who own property which they would risk losing if they were to be made bankrupt.
An IVA is available to all individuals, sole traders and partners who are experiencing debt problems.
Sole traders and partners often find that an IVA is a good solution to their debt problems as it lets them secure the survival of their business.
An IVA might be a good idea for you if:
- You owe money to people or companies that wouldn't agree to an informal debt management arrangement
- You've already tried an informal arrangement, but it's failed
For further information on IVA's contact debt3options today!
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