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An Individual Voluntary Arrangement (IVA) is a legally binding agreement between you and your creditors to repay what you can over a reasonable period (usually five to six years). This is an extremely popular form of insolvency and is used by thousands of people every year.
As an IVA is legally binding, it must be set up by a qualified professional. This individual, called an insolvency practitioner, primarily works on your behalf to handle all the complicated details.
During the set-up process, you and this professional will work together to work out how much you owe and how long the IVA should last. The insolvency practitioner will also take down details such as any assets you might have, your income, and which lenders you owe money to.
During this time, it may be possible to apply for an interim order. This agreement is something which prevents your creditors from taking additional legal action while the IVA is being considered.
Once that’s done, the practitioner should have a really good idea as to whether an IVA would be the best solution for you. If not, he or she might recommend an alternative – such as bankruptcy. Assuming the agreement has a good chance of success though, the IVA process continues.
After the initial set-up, the insolvency practitioner will get in touch with your creditors. For the IVA to become active, the creditors who hold at least 75% of your total debts must agree to it. Providing the IVA gives them a better return than bankruptcy, they should agree to the terms. It’s normally quite rare for lenders to refuse but – if they do – it’s not the end of the world. You’ll usually be allowed to revise your proposal and try again.
If the IVA is approved, the details of the agreement are distributed to your creditors. Interest rates and charges are frozen, your lenders shouldn’t directly contact you, and you’ll be well on your way to dealing with your debts.
Before this though, your insolvency practitioner should have discussed payments with you. You ought to know exactly what you’ll be repaying and when for the next few years. This individual is now tasked with making sure everyone sticks to the terms of the IVA – this includes yourself and creditors.
Monthly payments should always be made for the entirety of the scheme. Once this period expires though, any remaining debt is written off.
An IVA may be right for you under the following circumstances:
Assuming those sound like your situation, get in touch. We can help determine if you qualify and start getting the ball rolling on your IVA application.
Debt write off applies to unsecured debts and on completion of an IVA. A debt write off amount of between 20% and 80% is realistic, however the debt write off amount for each customer differs depending upon their individual financial circumstances and is subject to the approval of their creditors.
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Free money help and advice can be found at the MoneyAdviceService.org.uk