Individual Voluntary Arrangement Definition
A lot of people searching for a solution to their debt problems are open to many kinds of options when it comes to a way to solve their money matters. One question people tend to want to know the answer to is `what is the Individual Voluntary Arrangement definition?' This article will try to help you understand this a little better.
The Individual Voluntary Arrangement Definition and Purpose
The basis of the Individual Voluntary Arrangement definition is that it is a legally standing contract that is agreed between debtor and creditor, it is also shortened to in many circumstances an IVA.
An IVA works to put you back in control of your debts and stop them from spiralling drastically. By looking at your current situation, what money is coming in to the household and what is going out, a sum of money of which you can comfortably pay is offered to creditors as a new way to make payments.
This sum of (must be at least £200) money is paid by you in to the IVA and is then distributed around your creditors, thus saving you hundreds of pounds in monthly subsidies to credit card and loan companies. You also save money on the fact that late charges by creditors are stopped and current interest rates are frozen.
Setting up an IVA
An individual Voluntary Arrangement is not something that you yourself can put in place as they are legally binding. You must seek the help of a licensed practitioner to do this on your behalf. These practitioners are hugely beneficial to you across all aspects of the IVA.
Whomever you have chosen to proceed with the IVA on your behalf will work with you to fill in incomings and outgoings forms to work out how much to offer creditors. They will then call and hold a meeting of creditors to propose to them the new plan. Creditors are not obliged to accept this offer if they feel it is not suitable to them, not all of them have to, as long as 75% of creditors are happy then the IVA can be put in place. You do not have to attend any meeting called by your licensed practitioner (known as Nominee up until the IVA has begun and Supervisor thereafter) nor do you have to be in contact in any way with creditors during the IVA.
When the IVA is in Place
Once the IVA is in place all that is required of you is that you pay the agreed amount each month in to the IVA, your Supervisor will take care of making sure creditors receive dividends. The Supervisors fees are also taken from your monthly payment; this does not affect the amount you are paying but the amount creditors receive.
There are many factors to IVA`s as with any insolvency solution and you should be sure to ask anyone advising you the question of Individual Voluntary Arrangement definition. They will be able to give you a detailed breakdown of both advantages and disadvantages.