- 05
- Mar
The majority of our nation is in debt, this is mainly down to the state of the current financial market, people do not know which way to turn, bills are building up the debt collectors are knocking at the door, and people are frightened to pick up the phone. What can be done to help you resolve the situation and relieve the immense pressure you are feeling? Many are unaware of the options available to them, one option is an Individual Voluntary agreement otherwise known as an IVA.
If you feel your debts are out of control and you are not sleeping due to the worry and stress of it all, an IVA may be able to help. An IVA is a contract that is put in place by a licensed insolvency practitioner it will be a binding contract between you and your creditor, it means that you can decrease the payments of the full amount owed. IVA’s are ideal for people who are on the brink of bankruptcy.
With an IVA the creditor will almost always have to make compromise on the money that is owed to them. The insolvency practitioner is the person who decides on how much the debtor can afford, by looking into their earnings to see how much they can realistically afford monthly this normally means that the creditor will lose money.
There is certain information required from them the debtor for them to be eligible for an IVA, it is not available to everyone. To qualify for an IVA you will need to be in steady employment and be able to prove that you are earning enough money to live on after paying your loan.
A contract between both parties will be drawn up when the payment terms have been decided and agreed. The contract agreement cannot be changed once the contract has been signed by the creditor and debtor, meaning the creditor can no longer chase for payments as all interest and debts must be frozen the debt cannot be pursued and the creditor cannot initiate legal action to recover the money lost.
To qualify for an IVA you must have unsecured debt of £15,000 or more, you will need to be able to provide proof that you cannot afford to meet the payments on your loan each month. The period of paying off an IVA is normally between 3 and 5 years. IVA is a good alternative to bankruptcy but it is important to remember that it will have an effect on your credit rating.
Final comments
Individual Voluntary Agreements have been around for more or less 20 years and are very popular, they are not suitable for everyone, however they have helped many people in the past. If the debtor meets all the required payments on time and the debt has been cleared they could find that up to 70% of the debt has been removed. To find out how to qualify for an IVA search online.
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