IVA – Individual Voluntary Arrangement
In the UK the levels of consumer have debt have rocketed over recent years, with many households and individuals juggling a number of debts and trying to make crippling repayments each and every month. In many cases, borrowers are unable to keep up with the repayments on their financial commitments, and this is a situation that can quickly spiral out of control. However, there are programmes in place in the UK that can help those in unmanageable levels of debt, one of which is the IVA.
An IVA is a formal and legal agreement, and is designed to help those in unmanageable levels of debt – that is, those with a large amount of debt that cannot feasibly keep up repayments based upon their income – to benefit from lower monthly repayments and the opportunity to free themselves from debt in a far shorter period than they would otherwise be able to. With an IVA, the idea is that you reach an agreement with all of your creditors with regards to how much you can afford to repay each month based on your income and outgoings. You then pay the agreed amounts to each creditor for a period of five years, after which the remainder of the debt is written off.
There are a number of professional companies that are able to deal with the processing of an IVA. This is a legal process and can take some time, but whilst the IVA is being put together an Interim Order is granted, which means that you will not be hassled by creditors during the process and no further action can be taken by creditors. Once the IVA proposal has been put together – that is a proposal detailing how much you can afford to repay each of the creditors based on your income and outgoings – the creditors then have the opportunity to vote on whether to accept the proposal. In most cases, providing the offers of repayment are realistic, most will agree to the proposals, although this does depend on your circumstances and income as detailed in the proposal.
Once the IVA process is underway you will not have to deal with your creditors at all. You will have an assigned officer that will liase with all of your creditors, and you can simply pass on any correspondence that you receive to the officer to deal with. If and when the IVA proposal is agreed, you will simply have to make the agreed repayments to each of your creditors for the five year period on a monthly basis, after which time your balances will be written off and you will be free of your debt.
In order to be considered for an IVA you must meet certain criteria. You must have a certain level of debt and you have to be in full time employment. You should also be aware that the IVA is a legally binding contract and you must keep up with the agreed repayments. That said, you should find that the repayment can be comfortably met because they will be based upon what you can afford in relation to your income and other outgoings.
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