What is an IVA?
An Individual Voluntary Arrangement (IVA) is a legally binding contract/agreement between creditors and yourself to repay all your debts in a period of time. This is carried out by paying monthly payments to the creditors. It is similar to a Debt Management Plan but, since it is legally binding creditors have to stick to the terms and conditions which have been set by the court.
How can an IVA be set up?
An Individual Voluntary Arrangement is a type of insolvency. You will require a professional insolvency practitioner to carry out the IVA. The cost of the service can be expensive. On average it is £5000 for their service.
The benefit of having a practitioner is that they take control of dealing with creditors and sending out payments during the span of the IVA. This will reduce the stress of dealing with creditors and relieve you of much of the work.
How does the process work?
You will hire a insolvency practitioner to handle the over all process. You will pay them for their service. They usually charge an initial set up fee to cover their costs, they then often subtract a small amount out of the monthly payments you send, this is considered a handling fee. Not all practitioners will do this, they may have other methods of being paid. However, this is the most common way. You will then send the practitioner details about your situation with your lenders, for example, what you owe, assets and income etc.
Using the data and information you sent them they will create a repayment plan. They will consider your financial situation and ensure you do not pay more than you can afford. You will always be granted payments that allow for enough money after they have been sent. The monthly payments will be used to repay creditors. Once they have devise the terms of the contract/agreement they will contact the creditors to have them agree to the contract.
Creditors will have to abide by the terms after they have agreed as it is a legally-binding agreement. If they fail to do so they can be taken to court. After the terms are agreed you will begin to send your monthly payments to the practitioner. This is a lot simpler than dealing with individual creditors and sorting out payments etc. The practitioner will then use the payment to send out payments between the creditors, slowly repaying the debt.
The practitioner will also handle responses from the creditors. They will have deducted their own fee before sending out the payments. This process reoccurs each month until the IVA ends.
How much debt will be written off?
This is based off your monthly payments. If your payments are not enough to completely pay back your debt then the remaining sum will be written off.
If you would like more information regarding this call 0112 496 0919.
What happens when an IVA finishes?
Any debts included in the IVA will be written off. The typical time frame for an IVA is 5 years.
Once the Individual Voluntary Arrangement is finished it will be removed from the insolvency register.
Is an IVA the right choice for me?
There are many risks and benefits to be considered before deciding if an IVA is the correct option for solving your debt issues. If you require more clarification about the agreement then please call 0112 496 0919 or email email@example.com for expert advice. We have helped over 11,300 people recover from debt in the past three years, join them and start your journey to recovery.
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