This article is intended to explain the basics of what an IVA is and to offer some guidance on when it may be appropriate to consider one. Most references to IVAs on the web are from companies with a vested interest in offering you one, so there is a danger that the advice may be a little one-sided. The information in this article is unbiased and intended to provide the information you need to make an objective judgement about whether an IVA is right for you or not.What Is An IVA?
An IVA is an Individual Voluntary Arrangement and is a legal agreement between you and the people you owe money to. It is a way of consolidating your debts into one payment, and will usually result in some of your debt being written off at the end of the process. IVAs are only available in the UK. Residents of the US should refer to debt settlement, which is the nearest equivalent.
The usual requirement for being able to set up an IVA are that you have at least £15,000 in unsecured debts (ie debts which are not secured against your home, such as your mortgage) which you are unable to pay. Your debts must be to three or more creditors and you must have a regular income.
To set up an IVA you will need to have the agreement of at least 75% of your creditors (by value of the debts). If 75% or more agree to the IVA, then the remaining creditors have to go along with it. The majority of IVAs will last for a period up to five years, though the period varies depending on the circumstances.
Advantages of IVAs
A large proportion of your debts may be written off
You should be debt free at the end of the process
As the IVA is a private agreement, there are no public notices about it as there would be for bankruptcy
You will not normally be required to sell your home (as you may be with bankruptcy)
Creditors will no longer be allowed to hassle you for money owed
Other Points To Consider
You have to pay for the IVA - the costs are substantial, so the process will cost you more than if you are able to deal with your debts on your own. Even if there are no fees up front, your monthly payments will include fees.
You must have at least £15,000 worth of debt
Future applications for credit may be affected, even after the IVA has ended
Your monthly payments could be increased if your circumstances change
If you don't keep up with the payments on your IVA you could still be made bankrupt
You need at least 75% of your creditors to agree in order to go ahead
IVA Advice - Conclusions:
It is important to use a reputable company to advise you and set up your IVA, so follow recommendations for companies known to be ethical and well established. It is advisable to apply to two or three and then you can compare the proposals they make.
0 comments
Post a Comment