Help With Debt
If you are unfortunate enough to be in debt then you are not alone and help with debt problems are available
. The most common form of solution is called an IVA. It's a financial term and stands for Individual Voluntary Arrangement. It's a contractual agreement between you and your creditors where you both come to an arrangement to the people or company you owe money to. The idea behind an IVA is to make payments towards your debt so that a percentage of your final debt is paid off while protecting you from being charged further interest or charges on the debt.
An IVA repayment plan lasts for is around 5 years although this amount of time can be reduced to a shorter period if you are able to pay off a lump sum, preferably not gained from another means of credit otherwise you'll end up back where you started.
As an IVA is an official, legal building document, it has to be set up and overseen by a legally licensed professional body.
Typical questioned asked about IVA's include:
What are the criteria for getting an IVA? You have to be a resident of England, Wales or Northern Ireland with debts totalling over fifteen thousand pounds. Scotland is slightly different as it has a Standard Trust Deed, which is the Scottish alternative.
How much does it cost? It costs you a percentage of the debt you owe via monthly payments. The amount you pay is worked out by The Insolvency Practitioner who will work with you to decide what you can afford to pay each month. The payments will vary depending on your financial situation and how much you can afford after your vital monthly outgoings have been paid (like rent, bills etc). It's not quite as plain sailing as that, creditors will rarely settle for any total amount offered that isn't at least 20-25% of the original debt sum.
Do my creditors have to agree to such a payment plan? 75% of your creditors have to vote in your favour to be able to let you enter into an IVA.
Does an IVA affect my future credit? Under the agreement of an IVA you won't be able to take any credit out for its duration and a year after the final payment is made.
What happens when I've completed my payment plan? You'll get sent a Statement of Completion within 3 months of the final payment.
What if I don't make the agreed payments? Then you'll be made bankrupt.
Would I have to change my lifestyle if I entered into an IVA ? There are specific guidelines to ensure that you have a reasonable standard of living. Expenses such as social life, cable TV, drinking, smoking are all viewed as non-essential luxury items. As a result you need to make sure you document all of your essential living expenses when you apply.
Can I pay off my IVA before the agreed time period is up? If you win the lottery or receive a windfall of money then you'll be able to pay off your creditors earlier than they anticipated.
Why would I fail An IVA? If you don't keep up your agreed monthly repayments, or if you lose your job will both affect your chances of getting an IVA.
by: Bill Weston
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