What is meant by an IVA?
IVA is an acronym for Individual Voluntary Arrangements. The process is legally binding and what set in place by the government in 1986 to help people who had a substantial amount of debt they could never afford to clear. It was a way for struggling debtors to avoid eliminating their liabilities. An IVA is a more effective and beneficial alternative form of debt help compared to bankruptcy.
The client would seek out a suitable Debt Advisor who would calculate an affordable monthly payment. This would then be submitted as part of the IVA proposal and sent to each creditor for approval. The terms and conditions are discussed during a creditors meeting, moderated by the Debt Advisor after which a vote approval is needed by at least 75% of the creditors present. Once the IVA agreement is approved, creditors cannot impose any interest or charges on existing debts and can not longer contact the client directly.
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What are the advantages?
Some of the main advantages of opting for an IVA debt help arrangement is that you as a debtor can become debt-free in just 60 months. You can create a much lower affordable monthly payment and clear off as much as 75% of your unsecured debts. IVA’s fast becoming the best form of debt help to those who owe a substantial amount of debt over £15,000 who have very little hope of every clearing the debt. Through one single affordable payment each month, you arrive at an affordable method to pay off unsecured debts. There is no interest or charges applicable during the course of an IVA. If you are a homeowner or a tenant you are still eligible to get debt help through an IVA.
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Who is eligible?
There are high levels of costs implicated to creditors in an IVA debt help arrangement, so IVA’s are only applicable to persons who have unsecured debts of £15,000 pounds or above and who can afford to pay £200 per month towards their unsecured debts.
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Is my home at risk?
There is no risk to your home in an IVA. However, if you have sufficient equity on the home then you will be required to release some equity to pay towards the arrangement.
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Can I continue my business?
Yes, with an IVA debt help arrangement, you have no restrictions on working or earning income from a business.
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Will an IVA tarnish my reputation?
No, since an IVA is not advertised by press like bankruptcy is, there is little or no impact on your image or reputation.
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What is the duration of an IVA?
Usually, IVA debt help agreements last for 60 months or 5 years. This can be reduced if the debtor can increase payments further into the agreement.
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What creditors can be included?
An IVA debt help arrangement can include creditors such as Debit or Credit Cards, Store Cards, Loans, Overdrafts or any form of unsecured debt. Even family or friends who have loaned you money, Outstanding bills, Inland Revenue and Customs and Excise can be included.
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Bankruptcy Order or Statutory Demand?
If you have been faced with a bankruptcy order or a statutory demand then you can still apply for IVA debt help, provided your Debt Advisor feel it is appropriate.
To speak to somebody in confidence about applying for an IVA call us free on 0845 459 9940 or contact us for a free call back.
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What about my assets?
Compared to bankruptcy, which places a huge risk on assets, an IVA poses a comparatively lesser amount of risk. The only risks are ISA, endowment policy, premium bond etc. which are cashed for their value, whilst the home can be untouched by the creditors. Since there is a fixed, regular payment being offered in an IVA form of debt help there is more flexibility on the part of creditors. If the debtor is anticipating an inheritance or cashing some existing assets, then there value increase needs to be calculated by the debtors allocated debt advisor along with the monthly payment.
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Is my credit rating affected?
When entering into an IVA debt help arrangement the debtors credit rating is temporarily affected. Whilst you are under an IVA, you would not be able to apply for any credit unless it has been approved by your debt advisor and you have the creditors approval.
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What is the stigma associated with an IVA?
Compared to bankruptcy, which will have a huge negative impact on a person’s reputation, an IVA does not carry as much stigma. Since it is not advertised by the local press, there is little or no chance of tarnishing of a person’s reputation. However, the DTI maintains a record of all IVA debt help arrangements in their register.
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