Individual Voluntary Arrangement Advice | Debt Relief Order

Individual Voluntary Arrangement Advice | Debt Relief Order

An IVA or Individual Voluntary Arrangement is a formal agreement between you and your creditors that allows you to repay the money according to a new agreement. IVA enables you to repay the borrowed money to your creditors based on what you can afford. 

The new agreement will be legally binding and all the parties involved, including the creditors, have to accept the terms of the new payment plan. For those who are currently dealing with an unmanageable sum, IVA can be quite a good solution.

What Is An IVA? 

Individual Voluntary Arrangement or IVA is basically a debt solution plan. IVA is famous for dealing with personal unsecured debts. Many people refer to it as a plan that protects you from being bankrupt. IVA provides you with an amazing repayment structure so that you can make the repayments according to affordability and not to the previous contractual agreement between you and your creditors. 

Who Needs IVA The Most?

As discussed earlier, IVA helps you from getting bankrupt. That means, if you are loaded with unsecured debt issues, you can apply for an IVA. And, the creditors will agree to accept the payments rather than leading you to bankruptcy. But it is most helpful to those people who own assets because IVA, contrary to bankruptcy, tends to protect all your assets. You can use IVA even for protecting your income. Because if you are in a profession that does not allow bankruptcy as a viable solution to debts, you will definitely want to safeguard yourself. 

How Does an IVA Work For you?

When you fail to keep your promise to your creditors, and do not repay in time, they try to force you to bankruptcy. But with IVA you are able to make your creditors understand that they can get more money than before if they give you another chance and don’t make you bankrupt. IVA makes your creditors understand that selling all your assets forcefully would not bring them more profit. 

For IVA to work, you will be needing a highly qualified officer who is a specialist in insolvency law and is aware of all the rules and regulations of IVA. This individual will work with you on how to project your proposal to the creditors. They ensure that both the parties are sticking to IVA and are both their interests will get fulfilled.

The proposal typically analyses your monthly income and calculates your affordability. It decides for you the monthly repayable amount. The IVA agreement usually lasts for 60 to 72 months. 

Steps to IVA Solutions

The process of IVA includes various stages. Before going to sign an IVA, get an idea of how the whole process would look like.

  • The very first thing that you would think over is, whether IVA is appropriate for you not. Not all people suffering from debt issues need an IVA. So be very clear about your choice first. For that, you may take the help of a qualified insolvency specialist. Discuss your current situation with him and get the best advice.
  • After you decide that you need help, a statement of affairs will be drawn up. Here all the information like your income, total debt amount and the assets you own,   will be provided.
  • Now that your statement of affairs is ready and you agree to the monthly repayment method, it’s time to place the proposal in front of your creditors. They will receive documents regarding this and there will also be a form mentioning the date for the meeting.
  • The next stage is the meeting. Meeting with all your creditors and placing your offer in front of them is the most important stage. Because here they decide whether they want to accept the proposal or not. IVA gives you immediate protection If you gather 75% votes of the creditors.
  • If your proposal gets accepted, you will be informed and a supervisor will be appointed for you. This supervisor will make sure that you are repaying the monthly amount on time.

Why Should You Choose IVA?

It is very natural if this question has come to your mind. There are other solutions too for this issue then why would you choose only IVA? Because IVA is a legal agreement that both parties have agreed to. It gives you full protection from your creditors and stops you from getting bankrupt. When the IVA period is going on, you are free from all the harassment and threats from the creditors. Also, it takes care of the creditors by fulfilling their interests too.

Debts Included in IVA

Multiple debts are included in an IVA. They are

  • Personal loans
  • Credit cards
  • Overdrafts
  • Council tax
  • Energy bills
  • Store cards
  • Tax credit

What Debts You Can’t Cover In An IVA?

Though IVA covers the majority of loans and debts, it also does not cover some of them. Below are the debts that IVA fails to cover.

  1. Students loan
  2. Secured loans
  3. Child support arrears
  4. Magistrates court fines
  5. Court-ordered child maintenance arrears.

Tip: You can consult your insolvency practitioner for advice. They will help you to pay off your IVA and as well as the non included debts on time.