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How to Set up & Apply for an IVA? Debt Solution

An agreement between you (the debtor) and the creditors, legally, is known as the Individual Voluntary Arrangement. A certain period of time is set for total debt repayment. If you look at the monthly payment, it’s affordable. Furthermore, you need the involvement of an Insolvency Practitioner (IP). The IP will take care of all the debt management after the IVA is active. Starting from a discussion about the terms and conditions with your creditors to deciding the monthly payments, you have to take each and every step, regarding the clearance of the debt, after consulting with your IP.

IVA: Its Working Procedure

When you are willing to pick up an IVA, first visit the company that provides the debt management scheme. Then, understand how an individual voluntary arrangement is set up. Make sure the organization has a good reputation. Opting for the IVA from a reputed organization might be expensive, but it’s not at all that expensive compared to your debts. 

As the total time duration of the IVA is just 5 years, you have to pay the entire repayment in this time duration. If any problem occurs regarding the missing of payments or anything else, then the time might extend up to 12 months more. 

How is an IVA Setup? 

Before setting up the IVA, you have to follow some simple and effective procedures. These procedures will help you to continue with the IVA, with ease. So, let’s have a look: 

Step 1: Hire an IP

As you already know that the Insolvency Practitioner will play the most important key role in your IVA. So, hire a practitioner who has enough experience in this matter. Talk to him/her and discuss the fees structure. If all goes well, hire the person to sort the matter as soon as possible. 

Step 2: Provide all the Documents

Now you need to provide all the documentation and the list includes your salary payslips, the complete list of your income and expenditure, list of your available assets and others. If you don’t provide all of this information, then the IP will not be able to handle the creditors, as well as the IVA. 

Step 3: Talking to the Creditors

With all the necessary documents, the IP will arrange a meeting with the creditors. Generally, people who opt for the IVA don’t attend the meeting with the creditors. The IP will do everything on your behalf. He/she will propose the IVA and wait for the creditors’ voting poll. The IVA will only be active if most of the creditors agree and respond positively. 

Step 4: Maintaining all the IVA Protocols

With the guidance of the IVA supervisor, you as well as the IP must follow all the protocols. A little bit of glitch in these protocols can result in the cancellation of the IVA. On your behalf, the IP will check all of your income and expenditure. 

After that, he/she will have to list out your assets. If you are willing to make any changes in the IVA agreement, never forget to inform the IP and the IVA supervisor. 

Step 5: Apply for the Interim Order

While the initiation of the IVA, some of the creditors might take legal actions against you. To stop these kinds of actions, the IP will appeal in the court for the interim order. The interim order will act as a protective shield against the actions of the creditors. 

Step 6: Discuss the Repayment Details

When the interim order arrives, you are safe for a while. After that, sit down and consult with your IP regarding the financial situation. In addition to that, you may also discuss a few ideas about how to save your assets. Hopefully, the IP will be able to give you the appropriate ideas regarding that. 

IVA: Terms and Conditions 

There are several terms and conditions that you have to follow while the IVA is active. The first and most important is listening to your IP and the IVA supervisor. Never try to violate what they are addressing you. Further, you must pay the exact amount that is mentioned in the IVA agreement. 

If you miss or skip a payment, always consult with the IP and the IVA supervisor. They can find the right solution for you. Furthermore, you have to be a citizen of England and Wales to avail this benefit. In case you are a citizen of Scotland, then you cannot apply for an IVA, but a Protected Trust Deed is a suitable option for you. 

Can IVA Eliminate all the Debts?

Not really, IVA has its own limitations that you must know. Not the entire debt, but most of the debts will be eliminated by the IVA. So, here is the list of debts that the IVA deals with: 

  • Personal Loans
  • Bank Overdrafts
  • Council Tax Debts
  • Various types of Mortgages
  • Debts of credit cards

HMRC’s debts can also be written off with the help of the IVA, whereas educational loans, fines, car loans cannot be included in the IVA. You have to sort out these matters on your own. 

Is IVA suitable for you?

Before proceeding with IVA, you must know whether it is suitable for you or not. Here are some conditions that will help you to understand whether you are compatible with IVA or not.

  • Debts more than 5000 pounds.
  • More than two creditors are present. 
  • Have a monthly income of more than 80 pounds.
  • Sufficient deposit to pay the monthly debt amount. 

If you fulfil all the above criteria, then the IVA will be suitable for you. Other than that, you have to think of something else for the repayment of debts. 

Can IVA Proposal get rejected?

As you already know that the IVA will only be active if most of the creditors agree to your terms and conditions. If somehow they don’t agree with you, then you need to talk to them and come to a conclusion. Try to convince them by showing your entire financial condition. Before that, you can also seek advice from a debt expert to receive a positive response.

Several Facts about Remortgaging

The facility of remortgaging might be available during an IVA, but the chances are quite bleak. On the other hand, the facility of remortgaging will also take place when your assets have a good equity value. So, always be careful about your assets during an IVA. 

The Condition of your Credit Ratings

Your credit rating will get affected because of the IVA. Unfortunately, you cannot do anything about it and the IVA is going to stay in your credit books for quite some time. And, you need to take every measure, so that the County Court doesn’t affect your credit records. 

If the Country Court gets involved, then it can affect your reputation. As a result, even after completing the IVA, you will face a lot of troublesome situations during any type of credit purchase in the future. 

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