What is an Individual Voluntary Arrangement
Many people ask ` what is an Individual Voluntary Arrangement?' Also known as IVA`s they are legally binding arrangements between you and your creditors. You come up with a reduced monthly sum of which you can afford and offer it to the people who your debt is with. An IVA is put in place and payments are made over (usually) a five year period, after the IVA has ended any unsecured debt remaining is written off as settled.
How It Works
First of all it is recommended to ask an expert IVA advisor what is an Individual Voluntary Arrangement? They tell you in confidence what you need to know.
There are certain criteria you must meet to be accepted for an IVA, your outstanding debts must total over £15,000, these debts must be owed to three or more different creditors. You are required to have at least £200 available for repayments to your creditors and also prove that you are receiving a regular income.
It will then be decided that an Individual Voluntary Arrangement is the right course of action for you. Trained advisors will help you to work through an income and expenditure form and determine how much disposable income is available for you to make repayments to creditors.
Three quarters (75%) of creditors must agree to an IVA for it to put in place, any less and other methods of repayment must be sought, fortunately creditors look favourably on IVA`s as it guarantees them a portion or all of their money back. You pay your repayments directly in to the IVA and your representatives deal with your creditors on your behalf, conducting and managing all meetings regarding the IVA. This means during the period of the IVA you will not be hassled over the phone or sent letters from your creditors.
Due to the fact that an Individual Voluntary Arrangement is a legally binding contract, it must be set in place by a qualified licensed professional, this differs to a Debt Management Plan which is not legally binding. Your licensed professional will act as your representative during the full term of your IVA, overseeing all on-goings and make sure the terms of the agreement are kept. Your representative will receive a fee, this does not usually affect you or your repayment as any fee taken is deducted from the amount creditors receive.
Drawbacks
When asking `what is an Individual Voluntary Arrangement?' It is important to ask about the bad points. There are some drawbacks to taking out an IVA, although if your circumstances are as above then the positives do outweigh the negatives.
Home and Assets
I`m sure that when asking `what is an Individual Voluntary Arrangement?' You will want to know about your home. Your home is under no threat of repossession although you may need to release any equity you may have. Any expensive assets such as cars or other vehicles may be required to be sold on and replaced by a cheaper alternative where available.