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Individual Voluntary Arrangements
Advice On Using An IVA
If you are reading this you may have found that you are deep in debt and do not know where to turn. There are options that you have besides bankruptcy. You may have tried other methods to get out of debt. Some common ways include loan consolidation and debt management plans. Do not think that you have no other choice than bankruptcy left to you, because there is also the option in the UK of a debt solution called an IVA.
IVA stands for Individual Voluntary Arrangement and it is a formal agreement you make to pay back some of the debt which you owe. It is a better method than bankruptcy even though it will have a negative impact on your credit. It may affect your credit but you will be able to keep your home and auto. You will be able to get good credit again in the future. It will be much sooner than with a bankruptcy.
There are some important rules with an IVA. You must owe at least 15,000 pounds in debt and you must owe it to at least three creditors. Creditors for 75% of the debt you owe must agree to setting up the arrangement. You cannot do an IVA yourself as they have to be set up by an insolvency practitioner.
Once 75% of your creditors agree with the IVA the rest are forced to go along with the arrangement. They have no choice in the matter because that is part of the arrangement and it is a legally binding contract. That means you must stick to the payment arrangement and your creditors must stick to the agreement as well. They will no longer call and harass you once this is in place.
You will pay an IVA for five years. Near the end of those five years you may be asked to take the equity in your house and put it towards the payment of the debts you owe. This is quite common even though you are not forced to sell your home. At the end of the five years you will be finished with the arrangement. You will owe nothing more to your creditors. Your payments will be figured by what you can afford without being put in a tough position.
You may only pay back a small portion of what is actually owed. It is quite common to only pay back 40 or 50 percent of what you owe. Your credit will be affected for at least five years and usually it will be six years. After the six years is up you will be back on your feet and able to buy a home or get things on credit again. This is faster than a bankruptcy as this can last for ten years on your credit.
If you are having trouble with debt and do not know where to turn then you should talk to an expert in financial obligations. They will be able to tell you if an IVA is right for you. Remember not everyone can use IVA as a method to get out of debt. If you qualify this is a way to pay what you can afford on your debts.
