An Individual Voluntary Arrangement, usually known as an IVA settlement plan, is a reliable debt solution where you have to agree to pay back what you can afford every month towards your debts that usually last for five to six years.
Well, the solution can only be applicable to people staying in Wales, England, & Northern Ireland. An Individual Voluntary Arrangement can allow a representative to put a settlement proposal to your lender on your behalf, which if approved, will mean your lender can not take further legal steps against you, & you are able to protect as well as retain properties & assets including car or house, & you will be debt-free eventually, when the settlement agreement gets completed.
An Individual Voluntary Arrangement is a contract between yourself & your lenders which assist you pay back what you can afford & write off debts (along with the other charges & interest) that are unaffordable. And you can make a single monthly payment to all of your debts when the settlement agreement gets approved & no longer required to talk directly with your lenders.
And when you complete your settlement agreement, the outstanding debt gets cleared automatically & you are debt-free.
To understand if this resolution can be the best bet for you, you have to first seek debt help. There are a number of companies available in the market offering IVA debt advice. So, check online or ask your friends and neighbors if they have any reference for a reliable IVA service provider!
Accessing an Individual Voluntary Arrangement
An Individual Voluntary Arrangement is a regulated solution needing a professional Insolvency Practitioner to administer the settlement arrangement. Well, there are both positives & negative sides. So, before you register yourself for IVA, be sure to be aware of what these are & how they might impact on your personal circumstance.
Well, one negative that’s pretty essential to consider is that your credit score would be influenced & the impact would stay on your credit report for more than five to six years.
Well, if you qualify for an Individual Voluntary Arrangement it’s unlikely you will pay back all of your debt, but, if all of a sudden you come into inherit money, or earn some additional money during the term of the IVA settlement, then it is expected you would use this towards your debts.
The majority of people accessing an Individual Voluntary Arrangement would not pay back all of their debt & would experience a certain element of debt write-off. So, now you can understand the fact that an IVA settlement plan can be an alternative to bankruptcy, but, if you are thinking about accessing any debt solution, then it’s pretty necessary that you get qualified IVA debt advice first.
You might qualify for more than 2 debt solutions & it is quite essential you have all the aspects to make an informed decision. Professional debt advisors can help you determine what opportunities are available to fix your debt oriented issues & assist you access the best debt solution.
What debts are involved in an IVA Settlement Plan?
The majority of the unsecured debts are involved. Unsecured debt actually refers to a debt that is not secured or tied against the property or assets. For example, a mortgage is secured against a property.
So, unsecured debts that can be incorporated in an IVA settlement plan include:
- Credit card debts
- Payday loans
- Personal loans
- Store cards
- Council tax arrears
- Utility debts, like gas/electricity/water bills
- Debts owed to friends/ family
- Most overpayment of benefits
- Catalogue debts
- Overdrafts
There are certain debts that cannot be incorporated in an IVA settlement plan, including:
- Hire purchase agreements
- Mortgage/mortgage arrears
- Child support arrears
- Fraudulent debts
- Secured loans
- Court fines
- Student loans
Well, if you are not sure whether your debts can be incorporated in an IVA settlement plan, then it is always best to speak to a professional debt adviser who can help you with tailored guidance for your situation.
Benefits of an Individual Voluntary Arrangement
You can benefit from accessing an IVA settlement plan & some of major cause’s people often select to access the solution, are:
This is legally binding that means no interest or further charges can be incorporated & your lenders can’t take any further step when they’ve approved your settlement proposal.
You’ll be asked to make a single budget friendly payment each month & won’t need to pay several creditors directly.
So, as long as you’ve made each and every contribution, you can expect to be debt-free at the end of the settlement agreement, with no undesired bills to pay.
You’re possibly able to keep your property within the solution. Usually, the professional Insolvency Practitioner will be interested in any equity.
You’re enabled an expenditure in an IVA settlement plan for things you might not have been able to afford previously, like sports, clothes, entertainment, & hobbies.
There are certain things that aren’t considered assets & you retain. These incorporate phones, computers, clothes, sofas, furniture, televisions, & other household stuff.
If you haven’t begun to access your pension, you’ll not expect to pay this fund towards your solution.
You’ll gain control of your finances & be able to make a debt-free future.
Negatives of an IVA
There are certain drawbacks to accessing an IVA settlement agreement which you must be aware of. The most significant drawbacks to consider are:
Any equity in your property or any kind of assets will be considered. You’ll not be able to sell your property. And if you cannot re-mortgage for releasing equity then your solution will be expanded for 1 year in lieu of your equity.
This Is a legally binding process therefore, defaulting on the settlement agreement can result in the IVA failing, that can mean your lenders might move ahead to bankruptcy.
Your earnings & expenditure will be checked and analyzed manually; therefore your contribution towards debt can fluctuate up as well as down.
Your IVA will be registered within your credit report. And the default on your credit report will remain for five to six years in total from the time it was applied.
A remortgage is possible to be on less favorable terms & if you are not able to get a remortgage your monthly payments might be expanded for up to 1 year.
If you’ve valuable assets like savings, shares, endowments, bonds, ISAs, or stocks, these might require to be realized for the advantage of lenders.
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Your bank can directly take money from your account if they’re one of your lenders. And due to this reason, if you’re accessing any debt solution, this is always best to invoke a new bank account, with a bank you do not owe money to. You must not involve an account with a credit facility.
Apply For an IVA
There are a number of criteria you require to meet if you want to qualify for an IVA settlement plan. While you might meet the criteria, you might be suitable for other debt solutions & might desire to consider these as well.
So, the main criteria to access an IVA settlement plan is:
Your unsecured debt must be 5,000 pounds or over.
You should have a monthly disposable income that can be redirected towards the debts. If your disposable earning will mean you can easily payback your debt in less than 5 years, then IVA might not be the best option.
You have to live in Wales, Northern Ireland, or England.
To be approved, 75% of your lenders must approve the proposal. And if 75% of lenders approve your settlement plan, you’ll be secured from further steps. And if less than 75% agree with your settlement plan then move towards the other debt solutions.
Well, this comes to the end of ‘What is an IVA debt help in the UK’. Thanks for reading our guide. Hopefully, we have provided sufficient information so that you can easily decide whether an IVA settlement plan is suitable for you! Before applying for an IVA, make sure you consider both the advantages and drawbacks. For more information regarding IVA debt help, let us know….
