An Individual Voluntary Arrangement, or IVA, is a debt management tool that reduces your monthly payments on unsecured loans, and freezes the interest rates on your outstanding debts. It is an alternative to bankruptcy and provides you with a brighter financial future.
An IVA works by setting up a contractual arrangement with your creditors to repay the loan at a reduced rate. This may involve writing off a considerable amount of unsecured debt and paying it off over a period of years. The IVA allows you to keep your home and other assets, while still having money for your other essentials.
In order to qualify for an IVA, you must meet certain criteria. If you have a substantial income, you may be required to pay a portion of that amount into the IVA. It is also worth noting that if you owe debts to multiple creditors, it can be difficult to track your payment history.
The best way to find out what your options are is to seek professional advice. The National Debtline can help. You can also visit the Debt Advice Foundation for free and independent advice. It’s a registered UK charity, which has provided confidential support to thousands of people in the UK.
Using an IVA is a good idea if you cannot afford to make your monthly payments on time. An IVA will not only allow you to pay off your debts faster, it will also help protect your family home. If you own a home, your IVA will be more likely to be successful if you have a substantial equity in the house.
An IVA will also freeze the interest rates on your debts, making it much easier to handle. When you sign up for an IVA, you will be assigned a Supervisor who will monitor your income and expenditure at least on an annual basis.
An IVA will reduce the cost of your debts by allowing you to use your disposable income for the repayments. An IVA will also give you a good idea of what you can afford to repay. Depending on your circumstances, you will be able to choose the most appropriate payment plan.
An IVA may not be for you. If you owe more than your home is worth, you could face the ignominy of remortgaging your home to fund your repayments. You can also get an IVA extended by up to 12 months.
The Consumer Credit Act 1974 requires creditors to send you a number of important documents. These include arrears notices and a “Moving On” letter. The latter is a legal requirement to help you move on from a bad financial situation. However, it’s not a guarantee that you will be able to make all your repayments.
An IVA isn’t right for everyone, but it can be a useful tool if you need to improve your credit rating. If you are considering entering an IVA, look into the finer details and consult with a qualified expert.
Is an Individual Voluntary Arrangement (IVA) For You? was first seen on Debt Worries