For those with experience of bad debt, the term IVA may be an unfortunate familiarity. An IVA is an Individual Voluntary Agreement between a debtor and a creditor that has fallen behind the original repayment schedule of a debt. Typically, the debtor has invariably defaulted on the said agreement and has proposed an IVA, where the debtor suspends all interest and charges on a credit account, and agrees for the debt to be repaid at lower, slower rate than the original agreement.
A person may wish to have an IVA in place as a result of financial difficulty due to altered financial circumstances and, in some cases, an IVA can be put in place before an account is officially defaulted on. Some professionals in the credit agencies have claimed that creditors (their current or previous employers) tend to be more lenient if the debtor gives prior warning of their pending financial difficulty. This is considered to be an “unofficial rule,” but since it shows willingness on the customer’s behalf to deal with the debt constructively, debtors can sometimes be more flexible with the IVA.
An IVA is agreed over a fixed period and at an affordable rate to the debtor, but the debt can still be passed on to debt management agencies, and even to the courts as a county court judgement (or CCJ) if the debtor doesn’t service the IVA as per he agreed terms.
IVA’s are, officially, said to be over five years and involve minimum repayments of 150 per month, but in fact the IVA is an agreement that is at the discretion of the debtor. Some debtors are even said to have agreed IVA’s of less than 50 per month, and in certain circumstances, even lesser amounts.
You may see advertisement from companies who claim to be able to help those struggling to repay debts, but the first port of call should always be Citizens Advice Bureau. They offer free, impartial advice on debt management that is not affiliated with credit agencies or private financial organisations.
If you have over 15,000 of debt then you could be eligble for an IVA, however first you must know – what is an IVA?
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Tags: credit repair, Debt, iva, personal finance