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Everything you need to know about IVAs

By James Mellor posted 08-27-2019 02:47

  

In the unfortunate circumstance that you are having problems managing your debt and you’ve done some online research on how to get out of it, you most probably stumbled upon the acronym IVA which stands for Individual Voluntary Arrangement. It is a legally binding agreement between you as the debt holder and your creditors stating that you’ll repay your debt in a certain amount of time. After you and your creditors sign the IVA it prohibits them from taking any other legal action against you while the IVA is force.

How to Get an IVA?

To get an IVA you will have to be qualified for it which means it would be necessary for you to provide documentation that you have a steady income because you’ll need to be able to pay a fixed sum every month which means you’ll need to have at least $150 excess income per month which can be contributed to paying off your IVA.

To start it off, your IVA has to be set up by an insolvency practitioner and has to be court approved. The insolvency practitioner you choose will have the job of figuring out what you are able to pay and how long it will take you to clear your debt.

For the IVA to start the majority of your creditors have to agree to it meaning 75% of the ones holding your debt has to agree in order for the IVA to be activated.

It seems like a great thing to get if you have a debt and you’re struggling with the payments and in this post we’ll break down exactly what IVA is, how to get an IVA as well as how it works and if it’s the right thing to do for your situation.

How Does IVA’s Work?

As we said earlier the insolvency practitioner you choose will figure out exactly how much you can spare and pay each month and your creditors have to agree to it before the IVA starts.

But in order for your IVA to go smoothly you need to pay the agreed sum every month to your insolvency practitioner and afterwards he will distribute the payment you made to the creditors that hold your debt. Once you gave in the last payment you’ll get a certificate for completion and in approximately three months the record of you IVA will be deleted from the designated register.

Make sure you don’t miss out on your monthly payments because there are penalties and repercussions when you fail to do so.

Is IVA The Right Thing To Do?

Whether or not you’re the right candidate and getting an IVA is for you completely depends on your situation. The main advantage of getting an IVA is that it allows you to be more in control as opposed to bankruptcy.

IVA’s have their risk as well so it’s not really risk free. You have to take into consideration that any property you own might be remortgaged and any personal plans you have might be used to pay off the creditors holding your debt.

Another setback will be that once you get an IVA it will decrease your chances of applying and getting a credit in the future even though there are some options because there are creditors that deal with people who aren’t qualified for regular credit loans.

Don’t forget that the insolvency practitioner you find isn’t doing the job for free but the amount you’re paying him is calculated into the monthly payment you can afford.

How to Pick an IVA Company?

Of course this is as important as all the other stuff we mentioned above because not all companies are the same. IVA companies can range from good to really bad and picking the right one should be taken seriously.

Basically what you want to do when picking out an IVA company is check their IVA failure rate, their fees and payments, the length of the IVA they offer and the amount of time they will need to issue your certificate of completion once you send over the final payment as it can range from a few months up to a year, depending on the company.

 

IVAs are getting more and more popular since it was introduced and even more once it became a topic of discussion on some of the best financial sites on the internet such as Forbes.

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