An IVA is a formal arrangement between you and your creditors. You can choose which creditors are involved in the arrangement, and you can contact a free debt adviser to find out more. Your creditors will be informed of your decision to apply for an IVA, which can include your council, mobile phone provider, utility suppliers, HMRC, and trade creditors.
The IVA will usually have a set repayment amount, which will be affordable and fair for you. Interest charges and other charges will be frozen. During the duration of the IVA, creditors cannot contact you, send bailiffs, or take you to court. Your IVA will protect your interests, and creditors cannot threaten you or compel you to sell assets, even if you fall behind.
You must have a reliable source of income and unsecured debts of at least PS70 per month. You must also have a basic bank account separate from all of your other debts. The basic bank account should not have overdraft or credit facilities. Some banks will not allow you to use your account during an IVA.
Your creditors will have to approve your IVA proposal in order for it to be accepted. It must be approved by 75% of your creditors (‘by value’) in order to be valid. You can also opt to have your creditors vote in favor or reject the IVA if they disagree with it.
IVA repayments may last five to six years and will depend on the amount of debt you owe. The repayment amounts are calculated based on the amount you can afford to pay back. If your income is stable and your creditors agree to the terms, the IVA may be a viable option for you. It can even help you write off some of your debt.
The IVA application process will require a number of documents. Depending on your circumstances, the documents you need will differ. Your IVA Drafter will discuss your living expenses with you to assess the affordability of your IVA. Ensure that you are honest and thorough in your documents. This will help them determine the best plan for you.
To apply for an IVA, you must first find out if you have any equity in your property. If you are a homeowner, you may need to release some equity through re-mortgaging your property. In some cases, your mortgage provider will issue a redemption statement. Either way, you need to provide as much information as possible to speed up the IVA process. If you do not provide sufficient information, your IVA could be rejected or you will be forced to pay excessive monthly payments.
Once your financial situation is assessed, you can discuss repayment with an Insolvency Practitioner to determine which option is the best for you. Once the IVA is marked as complete, the IVA will no longer appear on your credit report. In most cases, the IVA will not have a lasting effect on your credit score, but the IVA period will restrict your borrowing.
How to Apply For an IVA was first seen on Help with My Debt