If you are heavily in debt, you may have seen advertisements in the newspapers suggesting that there are legal ways to get your debts canceled or written off. You may also have heard of Individual Voluntary Arrangements, or IVAs, and you may wish to learn more about these. Read this article if you wish to learn the answer to the question “What is an IVA, and how does it work?”
Individual Voluntary Arrangements, or IVAs, are a legally binding way of clearing debt. They have been around since 1986, and are available in all parts of the UK, with the exception of Scotland. If you live in Scotland there is a similar process available under Scottish Law, but it is called a Protected Trust Deed.
IVAs were designed to be an alternative to bankruptcy. Most people regard bankruptcy with a great deal of concern, and it is certainly true that there is a great deal of stigma associated with becoming bankrupt. All of a bankrupt person’s possessions, including their home, are at risk of being sold to clear their debts, and those who have been bankrupted always find it difficult to obtain credit, and may be excluded from certain jobs.
IVAs are similar to bankruptcy in that they are a formal and legally binding process, and they will completely clear any debts at the end of the process. However they are very much free of the stigma and negative connotations associated with becoming bankrupt. A further advantage is that a person proposing an IVA solution has much more control of his or her assets, and is therefore much less like to risk being forced to sell his or her family home.
Usually the person who wishes to set up an IVA will have to work with an Insolvency Practitioner to work out how much of the debt he or she can afford to repay. The plan which is drawn up should always leave enough money to cover essential living expenses, and to repay any priority debts (e. G., mortgages, fines and taxes).
The Practitioner will propose the arrangement to the creditors, who can vote on whether to accept it or not. Clearly if the amount being repaid is very low then they will have little incentive to accept the arrangement, but when a person owes an unsecured debt (e. G., a credit card debt or unsecured loan), the creditor will always balance the amount they might get from the IVA with the costs they might incur if they continue to pursue the debt through debt collectors, bankruptcy and other options.
Assuming the creditors find the proposal acceptable, then the debtor is obliged to make the agreed repayments for the lifetime of the IVA agreement. Typically IVAs last for five years, and at the end of that time any remaining debts are written off.
Have you ever asked yorself the question – what is an IVA? If so, contact PayPlan to find out more.
Related posts:
- Protected Trust Deed May Help Scots With Personal Debt Problems
- Manage Your Debts With An IVA (Individual Voluntary Arrangement)
- What Is An IVA And How Do You Qualify?
- A Trust Deed Scotland Can Write Off Debt After Three Years
- Insolvency And Credit
- How To Arrange An Individual Voluntary Arrangement (IVA)
- An IVA Can Help With Debt Problems
- Consolidating Debt With A Debt Management Plan (DMP) Can Solve Financial Troubles
- UK Business : How To File For Bankruptcy
- Avoid Bankruptcy With An IVA
Tags: Bankruptcy, Debt, Debt Management, iva