What is an IVA?
An IVA is a legal debt relief plan that reduces the amount of money a debtor must pay. The agreement can last for five to six years and is usually approved by creditors. During the time the IVA is in effect, creditors are unable to add interest to the debts of the debtor. The debtor will be able to pay back a lower amount than they owe, and the remaining debt is written off.
Although an IVA does not require a sale, the borrower may have to release some of the equity in the property. The amount of equity available will depend on the value of the property. The amount of equity available is calculated by subtracting the mortgage from the value of the property. If the mortgage is less than 85% of the value of the property, the borrower may need to refinance the property.
When you apply for an IVA, you must be aware that it requires a majority of creditors to approve the proposal. Generally, seventy-five percent of your creditors (‘by value’) must approve your IVA. Some creditors may vote against it, particularly those who owe you the largest amount. The creditors may haggle over the terms of your IVA, such as the interest rate, or even the number of payments over the period of time.
An IVA is a legally binding agreement between you and your creditors. The creditors agree to this agreement, and they are legally bound not to pursue you for debt. If they agree, your debt will be written off, and you will be free from any further legal action. If you complete an IVA, you will no longer be in debt.
In Mexico, you should be aware of the IVA tax. This tax is a type of indirect tax, and it is passed from entity to entity along the supply chain. The IVA tax in Mexico is currently 16% of the FOB price, which means the price when the goods left the U.S. factory. This amount includes freight, insurance, and duties. The IVA tax on Mexican imports is in addition to the import duty.
A qualified professional called an insolvency practitioner will help you set up an IVA and will negotiate repayment terms. Your creditors must agree to the repayment plan, and 75% of them must approve the terms. You will then make monthly payments to your insolvency practitioner, and the practitioner will distribute the money between your creditors.
The cost of IVA varies from country to country. The rates depend on the type of property and personal circumstances. For example, in Spain, you may pay a high rate if you purchase a luxury property, but a low rate applies if you are buying a second-hand home.
What is an IVA? was first seen on Help with My Debt