How an IVA – Management Company Can Help You
IVA is short for Individual Voluntary Arrangement- This is essentially a formal agreement that helps you repay your debts and it can also freeze your charges and interest , even as it cuts-down the total amount you pay. This alternative is used in place of filing for bankruptcy because an IVA is a much less restrictive and less severe solution to a debt problem. But before you think about opting for an IVA, you will have to understand all the implications and technicalities of applying for one.
Though this particular option is not really suitable for everyone, an Individual Voluntary Arrangement is an ideal solution for clients with debts and who are going through a difficult time. This helps them in avoiding the severity of bankruptcy. An IVA is a legally-binding agreement with your creditors and it typically lasts for 5 years.
In this time frame, you are required to pay back the amount you can afford, on a monthly basis. This amount will be entirely based on your individual financial circumstances. It may also include certain assets and consistent contributions of your regular income. The IVA generally includes a certain degree of debt forgiveness that varies from one case to the next.
A Detailed Look
An IVA is backed by the government and is a great option for people who want to avoid overwhelming debts. The Individual Voluntary Arrangement defines the amount of money you will pay back to your creditors over a fixed-term and it keeps you free from the stigma of bankruptcy as well as all the associated penalties.
In practice, an IVA is a debt management agreement between you & your creditors (creditors are organizations whom you owe some money to). During the 5-year time frame of the IVA, all your charges & interest will be frozen and any of the money that you have not been able to repay over this time frame will then be written off. This simply means, that with an Individual Voluntary Arrangement you might just end up paying back much less than the actual amount you owe.
Since the monthly payments are based on the amount you can afford, an IVA makes sure that you have sufficient money for all the essentials such as food and rent. An IVA will be arranged by an IVA Management Company like Debt Legal. We will work with Third Party organisations that offer these solutions. We will offer you all the information and advice you need and will also manage the IVA for you. Now that you know what an IVA is, you will also have to understand whether it is suitable for you.
Who is Eligible ?
An IVA may be ideal for you if:
- You owe in excess of £15,000 (to 2/more creditors).
- The debts are unsecured. I.e. credit card debts/ personal loans (You are still able to get an IVA if you’ve got a secured or mortgage loan. However, these won’t be included in the agreement)
- You owe some money to 2/more creditors (a credit card & personal loan with 1 bank is considered to be one creditor)
- You are struggling to reduce all your debts
- You are a citizen of England, Northern Ireland or Wales. If you reside in Scotland, then a Protected Trust Deed is the equivalent of an IVA.
The Advantages & disadvantages
Before you decide if this option is right for you, speak with the expert consultants at an Individual Voluntary Arrangement Management Company. Take a look at the Advantages & disadvantages of an IVA
- Less stigmatizing and less severe than bankruptcy
- More private than a bankruptcy- the latter is announced publicly.
- You might be able to keep your assets such as your house/ car
- In case you have a business you are also permitted to continue to trade
- Limited to 5 years and you are debt free after that period
- It is customized for you and you pay back only the amount you can afford. This also reduces the total amount that you pay back
- Prevents any further legal action from creditors & puts a stop to threatening letters & phone calls.
- Negative impact on credit rating
- You will need either a lump sum/regular income (like a salary) in order to get started
- If you do not keep up the agreed-upon payments, you may still go bankrupt
- In case your circumstances change & your IVA Management Company is unable to get your creditors to effectively agree to the new terms, your Individual Voluntary arrangement will end
- You may have to remortgage your home/take out any secured loan against this- to release equity that can be used to pay your creditors
Getting the Right Advice
Talk to a reputed Individual Voluntary Arrangement Management Company about all your debt problems. When you approach Debt Legal, we will take a detailed look at your specific situation and then help you decide whether an IVA is a suitable option for you. The steps that will be followed are:
- We will guide you through the complete application process & gather all the information that is required
- We will then put together your IVA proposal
- Your creditors will have to approve the proposal
- A creditors’ meeting will then be held- they will vote either for/against the arrangement
- The IVA will be approved only if creditors holding at minimum of 75% of your debt vote in its favour
Different application procedures will be followed by the IVA Management Company, if you have a mortgage, and Debt Legal advisors will be able to provide you with complete details and support with that application too.
Once you have completed all the repayments that have been agreed in your Individual Voluntary Arrangement, we, as the Individual Voluntary Arrangement Company that is handling the IVA for you, will send it out to the Insolvency Service and they will update your records. For detailed information about the ramifications and what happens post completion of the IVA, contact Debt Legal on 0161 786 0910 or via this online form