What Is An IVA?
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What is an IVA? Often called an Individual Voluntary Arrangement (IVA), it’s a legally binding contract between you and your creditors. It’s a way to get your credit rating back on track while protecting your home and other assets from potential creditors. It also allows you to make affordable repayments over a period of five or six years.
A typical IVA will cover unsecured creditors such as credit cards and tax debts. In exchange for a percentage of the debt, you may be required to put some of your savings towards your debts. You will then make monthly payments for 5 or 6 years. If you are successful, the debt will be written off at the end of the IVA term.
In general, you’ll be making payments from your bank account. Your IVA will be reviewed annually, so your contributions can be adjusted to reflect your financial situation. You’ll also be required to pay a supervisor’s fee, which will be a flat rate or a percentage of the payments you make. This will cover the administration of your IVA and any queries you might have.
Aside from the monetary value, an IVA will also protect you from legal action from creditors. This is especially useful if you are a homeowner, and may mean you are no longer asked to sell your home. However, it’s important to note that there are exceptions to the rule. For example, if you’re a professional with financial responsibility, you might be able to keep your job while you’re working on settling your debts. You might also be able to borrow money to help you out, but you’ll have to make sure you use the appropriate loan.
The average IVA will last for five or six years, depending on your overall debt. This is because you’ll be required to make a series of smaller payments, each one being the best possible decision for you. You’ll have to decide what you can afford to pay each month, and what you’re willing to sacrifice. If you don’t, you might find yourself in a predicament. If you’re considering an IVA, you should speak to a debt expert to see if it’s right for you.
The IVA will be listed on your credit file for up to six years, lowering your credit rating in the process. You might want to avoid taking out a loan during this time. If you need to borrow money, you’ll have to go through an application process and may be charged a higher interest rate. You might also be prevented from taking out a credit card while you’re in an IVA.
Aside from the usual pitfalls, an IVA can be a great way to pay off your debts. The best part is that you don’t have to give up your home, but you will have to deal with the consequences of your debts. In some cases, you might be required to sell some of your possessions or return a car that you no longer need.
What Is An IVA? was first seen on Debt Worries