Individual Voluntary Arrangement Settlement

Individual Voluntary Arrangement Settlement

Nowadays with all round living costs on the rise and debts not decreasing it has led to many people becoming unable to meet payments on loans and credit cards as and when they fall due.

An Individual Voluntary Arrangement (IVA) could help you regain control of your finances if you have substantial debts. They work by reducing your monthly payments to creditors in to one monthly sum, one which you can comfortably afford to pay making it easier to budget your money each month.

How is an IVA Beneficial?

An IVA can be beneficial in saving you vital money, once your arrangement is in place it will freeze all interest on debts and stop you from having to pay for monthly late payment charges and fees. They also put a halt to any potential legal action threatened against you by creditors.

To have an IVA put in place it must be done a licensed practitioner; this is due to the formal nature of the agreement. Once in place it is set over (usually) a time period of five years, during this time all you are required to do is make the agreed payment each month. Your chosen licensed practitioner (known as supervisor) will deal with everything else including, replying to letters and answering phone calls from creditors. One part of the arrangement is that you do not have to interact with creditors.

Other Benefits

Another benefit of an IVA is that there are no upfront fees for you to have to pay; you only pay the monthly sum of money agreed at the start of the IVA. Supervisors are required to be paid but this is done by them taking their fee from your agreed figure before creditors receive dividends.

Unfortunately an IVA remains on your credit rating for six years making it hard to obtain any credit as you will be known to creditors as a high risk borrower. Should you come in to any money during the term of your agreement you could apply for an Individual Voluntary Arrangement settlement, any potential future creditors will look favourably upon this.

Individual Voluntary Arrangement Settlement

Asking for an Individual Voluntary Arrangement settlement means that you wish to finish the term of your IVA agreement early.

Once you have requested this to your supervisor, they will then proceed to call a meeting of all of your creditors, this is known as a Variation Meeting. Your supervisor will work with you to come up with a new statement with all details of the proposed Individual Voluntary Arrangement settlement and what funds are available for you to pay. This statement will then be put to the creditors.

If the creditors accept your request for the Individual Voluntary Arrangement settlement a time limit will be imposed within which you have to forward your lump sum payment, the time limits are usually set at three months. If all the funds are paid by you within the allotted time period the IVA will be down as settled once creditors have received their dividends.

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