| How Exactly Does An IVA Work? |
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| Written by Edward Woodwards |
| Wednesday, 30 September 2009 11:51 |
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If you ever encounter a serious financial crisis in your life like, you are under heavy amount of debt, normally 15,000 USD or more, the best thing to do would be opting for an IVA (Individual Voluntary Arrangement); it will help you lead to a debt-free life again.
If you ever encounter a serious financial crisis in your life like, you are under heavy amount of debt, normally 15,000 USD or more, the best thing to do would be opting for an IVA (Individual Voluntary Arrangement); it will help you lead to a debt-free life again. Since a bankruptcy could result in loss of assets, that is one of the main drawbacks of bankruptcy, IVAs are normally known to be a better substitute since the usual drawbacks a bankruptcy entails are not applicable. On the other hand, considering an IVA is a financial decision, and one needs to be fully aware of what is it all about before opting for it. You can only apply for an IVA after you have spoken to a debt adviser about your whole financial situation. This is to make sure that there is no other debt solution better suiting your current circumstances. After this meeting takes place and the debt adviser thinks that an IVA is the best solution, they will then sit down with you and create a proposal to tell all the creditors about the amount that they should be expecting if your IVA gets approved. After this, you give in this proposal to all the creditors so that they get time to scan it, after which they will get the option to vote either in the favour of or against the IVA being approved. In order for your request to be approved, depending on the value of the debt, you need to have 75% of all voting creditors to agree to this process. If this whole process goes through smoothly, you will start with the actual IVA procedures. You will be paying a fixed amount of money every month to the insolvency practitioner. He/she will then pay the creditors dividends on this amount set according to the IVA proposal. This process normally goes on for five years. During the term of this contract, you, along with all the creditors, would be bound under this legal agreement. The creditors will no longer have the right to pursue any form of legal action against you. The only way it is possible for them to take further legal action would be in case the terms of the contract are not followed. During the whole duration of the contract, the interest amount on your debt will be frozen unless the agreed terms state otherwise. If you happen to own a house, you might be expected to give out a fixed portion of equity of your house ownership. This will be done in the 54th month of your payments and will be divided amongst the creditors according to the share of debt you hold against them. After you have made your last payment in the 60th month, the process would be complete. Any remaining balance of debt would be waived off legally and you will be completely debt free. Your credit history will hold the record for the IVA for one year after it was completed. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Edward Woodwards is a financial expert. You can take his advice on individual voluntary arrangement on his recommended site http://www.iva.org.uk/iva-solutions.html |