What is an Individual Voluntary Arrangement (IVA)?
An Individual Voluntary Arrangement (IVA) is a legally binding agreement between you and your creditors. It allows you to get out of debt and put your credit rating back on track. It also provides a clean slate for you to start again. If you qualify, you can apply for an IVA, which will stop your creditors from pursuing you or taking legal action.
There are various criteria that you can use to determine whether or not you are eligible for an IVA. The amount of money you owe, your debt-to-income ratio, and your financial circumstances will play a part in determining whether you qualify. In the end, however, it is up to you to choose the right IVA.
An IVA may be appropriate if you have a good amount of equity in your home. It is also possible to enter an IVA if your creditors ask you to release a substantial amount of money from your property. This will help you to pay back the bulk of your debt over a longer period.
If you have a bad credit rating, you could find it difficult to obtain a new loan. This is because an IVA can make it difficult to take out credit cards or loans. In addition, the details of your IVA will stay on your credit file for six years.
Alternatively, if your debts are so large that you cannot afford to make a monthly payment, it may be time to look at other options. A debt consolidation loan can help you to manage your debts and avoid bankruptcy.
You can also opt for a one-off payment, which is only possible if you have a large sum of money saved up and can sell off some of your assets. This can be a complicated process but it is worthwhile. Normally, you will need to have enough savings to cover your monthly payments as well as any additional costs associated with the IVA.
During an IVA, your finances are closely monitored and you must make all required payments. If you miss a payment, your IP will add the missed months to the end of your IVA. If you make your required payments on time, your credit rating will remain intact.
If you think you may be eligible for an IVA, contact your creditor and request a free valuation. This can be done online or at your local estate agent. If your IP agrees to take on your case, you will have a formal meeting with your creditors. They will review your situation and make an IVA proposal for you. The proposal will likely include an outline of your current debts, your income, and your expenses. The IP will then work out your monthly contributions. The fee for this service will vary but usually is not more than PS1000.
There are also several other steps involved in getting an IVA approved. The first is to get your creditors to agree to your proposed IVA. Your creditors may also add their own conditions, or modifications, to your IVA. If they approve your proposal, your IVA will be officially entered into the Individual Insolvency Register.
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