How to Apply For an Individual Voluntary Arrangement (IVA)
An Individual Voluntary Arrangement (IVA) is an agreement between you and your creditors that you will pay back what you can afford over a specified period of time. This is different from bankruptcy. IVAs help thousands of people every year get out of debt. They protect you from debt recovery actions such as the seizure of your home or other assets. But, if you want to apply for an IVA, there are a few things you need to know.
Firstly, you must be insolvent, which means your total debt exceeds your total assets. The debt can be in the form of credit cards, store cards, overdrafts, Council Tax arrears, personal loans, or mortgage shortfalls. You should consider all of your options before you make a decision on which debt solution to use.
Next, you will need to find an insolvency practitioner. These are debt professionals who will help you create a proposal and submit it to your creditors. In addition to creating a proposal, the IP will help you draft a monthly payment plan. Your monthly payment will be determined by taking into account your income, household expenses, and priority commitments.
When you apply for an IVA, you need to have three or more creditors. Each creditor will be asked to approve your IVA proposal. If they do not agree to it, you may have to try another solution.
As with any debt solution, there are a few drawbacks to an IVA. It can take several years to reach a successful conclusion, and you should be aware that your credit rating will be negatively affected. However, it can be a great way to offer your creditors a reasonable monthly repayment.
It is important to keep your creditors informed of your progress and be clear with your debt adviser. Having the right information will improve your chances of getting an IVA approved. Make sure to ask your adviser for free advice on how you can make your repayments more affordable.
After your IP has drafted your proposal, you will have a meeting with all of your creditors. Your creditors will ask questions about your current financial situation and your ability to make your repayments. You should be honest and open with your creditors, especially if you have assets.
Creditors will also have the option to impose interest and fees on you. If you do not pay your IVA payments on time, your creditors can pursue you for repayment. To avoid this, you should be prepared to defend your position at the meeting.
Your IVA will be recorded on a public register. However, you will be protected from bailiff action or the sale of your home. A successful IVA can save your assets, and you will have a fresh start and rebuild your credit rating.
Getting an IVA is a major life change for many individuals. The process is easy to follow once it has been set up. During the first year of the IVA, you are required to pay a set monthly amount to the IP. At the end of the IVA, you will write off the remainder of your debt. For this reason, it is very important to make your repayments on time. Failure to do so can result in your IVA failing.
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