Having an IVA (Insolvency Voluntary Arrangement) is a solution that offers a fresh start to many people. It gives them the opportunity to repay their debts in a more flexible manner, without having to sell their home. It also allows them to pay off their debts over a period of five to six years. The IVA helps to protect a person’s family home.
An IVA can help to erase a considerable amount of unsecured debt. Usually, it is agreed that a person will make a low monthly repayment over a five to six year period. At the end of this time, if the person still owes money, the remaining balance will be written off. This can be done by a registered bankruptcy attorney.
An IP (Insolvency Practitioner) will review your financial situation, determine the amount of debt, and draft an IVA proposal. This is submitted to your creditors, who are asked to approve the IVA. The proposed payment is then divided among the creditors. Typically, the payment is based on a person’s disposable income, which is the money left over after incoming and outgoings.
If you are unable to make payments on time, or if you fail to meet a certain percentage of your monthly payment, you may breach your IVA. The IVA will be recorded on your credit record for six years. This will damage your credit rating. The IVA is also a risk to your home, and you may lose it if you cannot remortgage it.
You can also contact a debt charity, which will provide you with information on paying your debts. They can also give you advice about finding a lender who will offer you a good rate of interest. It can be difficult to find a reputable lender with bad credit. If you have an inaccurate credit record, you can ask your lender to include notes about your deferred payments. If this doesn’t work, you can seek the help of a debt management company.
Once you have a plan in place, it is important to keep the IP informed of any changes in your financial situation. If you are self-employed, you can continue to trade. However, you should keep in mind that you will not qualify for an IVA if you do not have a fixed income.
If you have a house that is worth more than the mortgage, you can ask the IP to release equity in your property. If you have a share of equity over PS5,000, you will need to re-mortgage your home. If you have a share of equity less than PS5,000, you will not need to re-mortgage.
If you receive a lump sum, you should check the terms of your bank account to make sure that you do not have to forfeit other assets. Some banks exercise a “right to offset” and this can mean that you lose your home if you do not re-mortgage it. You can get around this by switching your bank account.
What is an IVA? was first seen on Apply for an IVA