An IVA usually lasts for 5 or 6 years. But, it can be enhanced or reduced. So today, we explain how that is possible & what you can do about it. An Individual Voluntary Agreement will usually last for 5 years. But, with everyone’s situation being different, the time period of this agreement can vary on a case-by-case basis. For instance, if you get a windfall or have certain good changes to your financial situation, you might be able to pay this off a bit early. Explore how to do this!
What is an Individual Voluntary Arrangement?
An Individual Voluntary Arrangement stands for IVA & is designed to assist you get on top of your finances.
Well, this is an agreement with lenders in order to make payments in line with what individuals will be able to pay. An Individual Voluntary Arrangement can be preferable for both the debtor & the lender. Well, the person taking out the IVA settlement plan does not have to file for bankruptcy &, in the majority of the cases, a lender can recoup more of the debt through this settlement plan than with other solutions. You might even be able to write off any pending unsecured debts you borrow on completion of an Individual Voluntary Arrangement. To get more debt information, keep reading!
How long does an IVA last?
As we have already mentioned in the earlier section, an Individual Voluntary Arrangement will usually last for around 5 to 6 years. It enables the creditors in order to recover as many as possible borrowed to them, yet payments are affordable to enable the debtor in order to keep enough of their wages to cover their daily living expenses. When the IVA completes any outstanding unsecured debts are generally written off.
There are certain situations where the duration of the IVA settlement plan might increase. If you are a homeowner, you might be required to remortgage your assets during the last year in order to release the share of the equity if it is more than 5,000 pounds, based on some specific criteria. If it can’t occur, but, your IVA might run for an additional year instead – meaning the IVA settlement plan will last for 6 years as opposed to five. Your IVA settlement plan might last longer if you have failed to pay off the agreed payments or decreased the amount you pay every month, meaning that all these were included to the end of the IVA settlement plan. If you are not sure how long your IVA settlement plan will last, contact us via our application form & get a no-obligation consultation customized to you. So wherever you require IVA Help, we are here to help you!
How to pay an IVA off early
If your financial situation changes, & you are able to afford more, you’ll be required to make enhanced payments to the Individual Voluntary Agreement, which can result in closing your IVA a bit early. Well, there are also a certain situations which lead to you completing an IVA settlement agreement much sooner than expected:
- IVA windfall
Most IVAs have a “windfall clause”. And it is when you unexpectedly get a good amount of money, like in the form of a gift or inheritance. In such circumstances, the windfall will usually be required to be paid into the Individual Voluntary Agreement to go towards paying the debts. So, depending on how much the amount is, you might get a sufficient amount to pay the IVA in full, that will be all your debts & the costs of the Individual Voluntary Agreement, which completes the IVA earlier than expected.
This is also worth noting there are limitations on what is classed as the windfall. For instance, if you get a redundancy lump sum payment this is subject to its own terms & you will require to contact your Insolvency Practitioner & get the IVA Help!
- Additional funds
If you’ve a good amount of money available, for instance a gift from a third party, you might be able to use these funds in order to pay back your Individual Voluntary Agreement sooner if you get sufficient money to pay the IVA in full. On the other hand, you will be able to propose a ‘full & final’ offer to your lenders. So it is where, instead of making the monthly payments, you can offer your lenders a large lump sum.
Well, if the proposal is successful, your IVA must complete early.
Is an IVA right for me?
The entire length of an Individual Voluntary Agreement can sometimes put people off. But while, considering the outstanding unsecured debts in the IVA settlement plan are written off upon completion & it’s a trustworthy solution which takes your financial situation into account. Well the majority of the people found it the one of the most reliable approaches to deal with their debts. To solve your confusion, we are going to share the confusions, we are going to share the major PRO & CONs of IVA settlement plan! It will help you to determine wheather it is the best suited debt management plan for you or not!
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Pros & cons of IVA
So, the IVA pros & cons depend on the personal financial situation, but here’s a brief overview of the pros & cons we will cover!
- A budget friendly monthly payment
- Protects your properties along with the valuable assets
- Lenders should not harass you for payment
- The monthly payment is absolutely fixed as well as reliable
- Interest along with the charges are generally frozen
- It is a legally binding process
- Protection from bailiffs & other legal step
- Pose impact on the employment
- Influence your credit score & rating
- This is not private and you can not manage it one your own
- This means following a proper budget
- And in case you are a homeowner, you might require to release equity from your property
Still, it’s a choice that should not be taken without any kind of professional assistance first. So, as a result, you can consider the pros along with the cons before committing. However, fortunately, our team members are always ready & standing by to give you the best possible IVA Advice & solve all your queries or questions you may have in your mind.