An Individual Voluntary Arrangement (IVA) is an option available to all UK residents who wish to settle their account without going into bankruptcy.
The IVA is a flexible arrangement for debtors that allows them to pay off debt according to their means.
Many people are not aware of this very reasonable bankruptcy alternative.
With an IVA explained, you'll understand how the process works and be in a position to decide if an IVA is right for you.
The Process of IVA Explained The first step is to make a complete and honest list of your assets and debts.
You then draw up a realistic proposal as to how much you can reasonably afford to pay toward your accounts.
Your proposal may include the liquidation of certain assets to be applied toward debt, in addition to income.
Your repayments may be on a monthly basis, in lump sums, or a combination of both.
An IVA may reduce your repayment amounts by as much as two-thirds.
Your financial assessment will be reviewed.
It will then be finalised and presented to the court and your creditors for approval.
A meeting will be held, and all creditors who've been informed of the action will vote on the proposition.
75% of your creditors must approve the plan for it to become legal, and all creditors must be informed of the meeting to be included in the agreement.
Because creditors will get more money by accepting the IVA than they would if you were to become bankrupt, they are generally willing to accept your plan.
After the IVA has been approved, it becomes a binding legal contract.
You and your creditors receive a copy, and all parties are legally bound to honour it.
Your Insolvency Practitioner will supervise the discharge or your debts, collect your repayments, and distribute the money to creditors.
This simplifies matters for you and the creditors as well.
With an IVA, it's clear that the arrangement can be a win-win alternative to bankruptcy for you and your creditors.
Advantages Of The IVA Once the IVA is accepted, it bars further interest charges and fees from accruing on your accounts for the duration of the contract.
Another advantage is that your repayments become manageable.
The contract frees you from having to deal with numerous creditors.
An IVA gives you input into how your repayments are to be managed; a bankruptcy does not.
You also have the option of how long you would like your repayments to last.
Repayment periods are generally for five years, and sometimes the debt owing at the end of the repayment period can be written off, provided that you've honoured the terms and conditions of your contract.
With an IVA, you avoid the restrictions and costs imposed by bankruptcy in debt settlement.
An IVA also gives you the option to get out of a bankruptcy in process.
An IVA proposal can be submitted at any time after a bankruptcy action has begun.
If the proposal is accepted, all bankruptcy proceedings and other legal actions will stop.
The best approach is to create and submit an IVA early, well before your financial situation gets completely out of hand.
Get informed about the signs and symptoms of financial trouble so you can submit your IVA early on.
With an IVA explained, you may decide that this is the solution to your financial dilemma.
Be warned however that although the arrangement is voluntary, you are still obligated to honour the terms of the contract and provide complete, honest information as to your assets and liabilities.
Any violation of the agreement may result in a bankruptcy petition.