An individual voluntary arrangement or IVA has many pros
and one or two cons as well. This is a way for people to get out of debt without
having to file bankruptcy. Thousands of people find themselves in serious debt
every year. They need help and may not know where to get it. Many people are not
aware of an IVA. They may qualify for one and not realize the option is
available to them.
Not everyone will qualify for this alternative to bankruptcy, so the first step is to see if you are eligible by completing an IVA application on an appropriate website. As well as being a UK resident, you must owe money to three creditors or more and you must owe 15,000 pounds in debts to your individual creditors. If you have found yourself in need of help and you fit into these criteria you may want to consider an IVA.
An IVA agreement is a legal and binding arrangement that is made through a third party, the insolvency practitioner. He will meet with you to go over your finances. He will need to know what your income is and what your expenses are. Some of the expenses include rent or mortgage payment and utilities. Another expense that would be subtracted from your income is food. When the IP sees what you have left to work with he will make up a payment arrangement with your creditors. They will then vote on whether to accept the IVA or not. In most cases they will accept it. They could lose all of their money if you file for bankruptcy so they will usually settle for a portion of what you owe instead of taking the chance on getting nothing.
You will only pay back a small portion of what you owe the creditors. They will no longer be allowed to call and bother you. Unlike a bankruptcy you will not lose your home. You may have to use the equity in your home, however. A bankruptcy is listed in the local papers for everyone to see. An IVA is not. It is published in the Insolvency Register however. You will not have to worry about your job. Some job positions are lost if you file bankruptcy. That is not the case with an IVA.
Some cons to an IVA include the fact that it will have a negative impact on your credit. You will have poor credit for about 6 years. You will have to pay on an IVA for about five years. Usually with a bankruptcy it will be over in about a year. If your salary increases while on an IVA your payments into the IVA will go up. You will not be able to borrow or get anything on credit for about six years. You should also bear in mind that you will be tied into this agreement.
You should weigh the pros and cons and see if this is something that could help you. IVAs help many people to finally get out of debt. Once you do get out of debt try to stay that way. If you pay cash instead of buying on credit you will be able to prevent this from happening again. It takes too long to work your way back into financial freedom to jeopardize it with unnecessary credit purchases.
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