What is an IVA?
One of the first topics we should cover is exactly what an IVA is, as a lot of confusion surrounds finance related terms.This article is aimed to describe exactly what an IVA is and how it can be used to help reduce your debt.
An IVA can be a viable way to get yourself out of debt.
IVA actually stands for individual voluntary arrangement, which is a formal agreement between you and your creditors to pay back money that is owed to them, when you are currently unable to adhere to the existing payment terms. Generally an IVA can last around 5 years, with lower monthly payments usually offerd to ensure the repayments are met on time. Because of the formal nature of an IVA, the agreement must be set up by a certified insolvency practioner.
How does the IVA (individual voluntary arrangement) process work?
When an IVA is arranged, you will be asked about your current outstanding debt and other questions relating to your lifestyle, including your employment status, salary and other factors which may help formulate a payment plan to suit you. The idea here is for your IP (insolvency practitioner) to calculate the best possible payment plan to suit your current lifestyle, so that you can comfortable keep on paying your debt repayments.
The IP will then make an application to the court for an interim order, which will prevent any creditors taking legal action out on you in relation to the outstanding debt owed to them. A meeting will usually then be arranged, to discuss the terms of your IVA.If everything goes well, you will be given a reduced payment plan to ensure that your creditors get some of their money back, rather than costly court proceeding to reclaim the whole amount! NB: It is important to not confuse the IVA with a debt management plan, which is not legally binding!
Although an IVA is a very serious procedure (please note: that the process will be noted on your credit rating for up to 6 years!!), it can be a way to help you restructure how you pay your debt.
This website will continue to tell you more about debt managament, IVA’s and other debt relating issues. Please check back regularly for more finance articles!
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