Last Updated on Mar 11, 2020 by James W
What is an IVA?
Individual Voluntary Arrangements (IVRs) is a legally binding agreement between a creditor and a debtor which is initiated with the help of an Insolvency Practitioner (IP). It has proved to be one of the best ways to deal with unsecured debts such as store cards and credit card debts. In most cases, it last for five years. During this period, the debtor has to find mechanisms through which he or she can clear all or part of his or her debts.
How does IVRs work?
It’s a good example of insolvency which is managed by IP. Through the IP, you can repay your creditors within the stipulated period of time. This time frame is determined by the amount of money one can afford to pay the creditors and the debts one owes.
The IP draws a proposal which they present to the creditors. They creditors can either accept the proposal or decline it. If accepted, then one is legally bound to the agreement and the IP will deal with the creditors directly. Therefore, it’s imperative to choose a reliable, trustworthy, impartial and experienced IP to help you out of your debts through the IVRs plans.
Are there some additional fees involved?
IPs will not offer their services for free. It’s important to enquire from the available service providers to get one which suits you best. The major fees involved include:
The set-up fees; this is also referred to as the nominee fee which is usually used to set up the IVA and supervisor fees which is the cost of managing the entire process. It will depend on the IP you go for.
Individual Voluntary Arrangement is not suitable for everyone and thus, it’s important to have the following in mind:
There’s need to have a reliable and regular source of income which can enable you to pay the debts in a timely manner.
You must live in Northern Ireland, England or Wales to qualify for the IVA. For people who live in Scotland, they can always apply for trust deed to settle their debts.
The debts must be greater than the total assets you own. This doesn’t bar people with lump sums from applying for this; they can also apply for IVAs.
Applying for an Individual Voluntary Arrangement as a means of settling debts comes with very many benefits which include:
Better way to manage debts; it makes management of debts simpler as the debtor only makes one payment which he or she can afford. The possibility of some debts being written off at the end of the stipulated timeframe is also advantageous.
Free from creditors’ harassment; they’ll only be dealing with the IP and they’ll be bound by the agreed terms and conditions of the IVA. They can neither threaten nor harass the debtor.
However, if you apply for the IVA program, the credit rating will be affected since your name has to be included in the public register, you can be declared bankrupt if you fail to abide by the rules of the IVA and your expenditure can also be controlled by the creditors through the terms and conditions of the IVAs.
While in the IVA program, it’s important to be prompt on the agreed payments to avoid chance of the IVA being terminated. Having your expenditure within your income is a sure way to be free from debts.
written by: best_wryta