- 01
- Dec
It is more common today for people to need help with their debts this is mainly due to the state of the financial market and its credit issues. There are plenty of debt options that are being offered to deal with the existing problems. One solution is the individual voluntary agreement. An IVA is a good alternative to bankruptcy.
When debts are out of control it can be a very stressful time for most, an IVA can help manage your debts rather than struggling to make ends meet each month. An IVA is a binding contract that is arranged between you and your creditor, which is supervised by a licensed Insolvency practitioner this allows you to make reduced payments against the total amount you owe. It is a perfect solution for people who are on the verge of bankruptcy.
In most situations the creditors have to make a compromise on the debt that is owed to them when looking to resolve the debt between debtor and creditor. The insolvency practitioner looks at the earnings of the debtor and how much they can realistically afford each month, once sums are worked out it is normal for the creditor to lose money.
Once payments have been decided a contract will be prepared between both parties. When the contract has been signed by both creditor and debtor the agreement cannot be changed. This means the creditor will no longer be able to take any legal actions against you or harass you for money in any way.
Not everybody is eligible for an IVA, there are things that would be required from the debtor, for instance – they would need to be in employment and be able to prove that they have enough money for living expenses.
An IVA is normally taken out over a period of 3-5 years and is available for people who have an unsecured debt of a minimum of £15,000 you will need to prove that you cannot make the monthly payments on your debt. If you are looking into getting an IVA it is important to remember that it can have a long term effect on your credit rating and financial future.
Once the term of the IVA has finished, all the requirements of the IVA have been met and debts have been cleared, borrowers can find that up to 70% of their debt has been removed.
Final thoughts
IVA’s have been around for the best part of 20 years and are hugely popular in all parts of the world, however an IVA is not the best solution for everyone. Contact a fee free agency or a charitable group for more advice on this matter.
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