‘IVA’ is the abbreviation for Individual Voluntary Arrangements. If you have a huge amount of debt that you have to pay back and your creditors are threatening you to repay or face legal action, then there are two courses of action open to you. You can either file for bankruptcy, or apply for IVA. Declaring bankruptcy can become quite messy and the creditors will take over your assets and sell them. This would leave you without a home, car, and any other assets that you have. You could virtually end up on the streets.
If you try for an IVA, this is how it will work: If your IVA application is passed, the firm via which you apply for an IVA will send paperwork to be completed and returned to them. Then they will ask you to come in for a meeting and go over the application with you. If they think that your debts can be repaid without you having to sell your assets through a debt repayment program they will apply for processing your IVA application.
After the IVA application is accepted, a meeting of all the creditors will be summoned. This will occur about 2 to 3 weeks time after they receive your application. In the meeting, the creditors will have to finalize the repayment plan. If 75% of the creditors are in favour of accepting the terms and conditions of the IVA the others will be obligated to accept them.
Now after the acceptance, the firm or person who has negotiated the agreement will be the guarantor of the agreement. So, instead of making several different payments to all the creditors, there is only one payment that will be paid monthly.
The benefit of applying for an IVA is that it prevents your assets from being sold or taken away from you if you are a partner in a business or a sole proprietor or a working person, you can continue your work without any hindrance. Also, you get rid of all the creditors’ threats and visits. Hopefully, at the end of the term you will have cleared your debts and retained your assets.
An IVA is a preferable solution as compared to going bankrupt or playing a balancing act between creditors. One more benefit, and perhaps the largest, is that the increase in repayment amounts stops. This means that no more interest is added towards your payments. In a few cases, a good IVA handling company might be able to get your debts reduced. You may also be able to apply for a new mortgage while repaying an IVA. Also, the biggest advantage is that you will not lose your home or any other assets.
If your salary goes up by a large amount, the IVA may renegotiate with the creditors and get the repayment schedule changed so you can pay off the debt earlier, and in case it gets cut it may get increased giving you more time. So, no matter which way your earnings fluctuates your debts will remain the same.
There are obvious advantages to getting an IVA, especially if one has built up a lot of debt and has creditors threatening them. The first advantage being that you don’t have to shut down your business, secondly you don’t lose anything, and thirdly there is just one monthly payment that is to be made. Furthermore, in a few years you will be free of all your debts.
Viewed 74 times by 32 viewers
