How To Solve Your Debt Problem With An Iva
Debt is a huge problem all over the world, since the credit crunch the situation
has spiralled out of control leaving many people in financial difficulty even close to bankruptcy. If bankruptcy feels like the only way out, there is another option available and that is with an individual voluntary agreement otherwise known as an IVA.
So what is an individual voluntary agreement? This is when a licensed insolvency practitioner supervises a legally binding agreement between the creditor and the borrower. The Insolvency practitioner will ask the debtor to provide them with monthly earnings and outgoings, then they will need to work out if the debtor can afford to pay the money back to the creditor.
An IVA will benefit the debtor and help to pay back their debt by reducing the amount that is owed to the creditor, however this usually means that the creditor will lose money owed to them. Although it is not a perfect solution for the creditor. at least the company will get some of their investment back. An IVA is a better alternative then bankruptcy and can take a lot of pressure off the debtor.
The Insolvency Practitioner will go through the agreement with both creditor and debtor, when both parties agree with the terms, a contract will be drawn up, which both parties will need to sign. As soon as the contract has been signed it cannot be changed, it also means that the creditor can no longer call or harass the debtor for money. If the debt is paid back in full and on time, the debtor can get up to 70% of his or her debt removed.
An Individual voluntary agreement does come with its restrictions, so they are not a viable solution for everybody. To qualify for an IVA you would need to have an unsecured debt of 15,000 minimum and proof that you are not able to pay this debt would be compulsory. An IVA will normally be paid back within a term of 3 - 5 years. The Individual will then need to prove that he or she have been in long term employmentand that they can afford to to cover their monthly outgoings.
Final Thoughts
IVA's are great for individuals that are on the brink of bankruptcy, however IVA's should be looked into with caution, as it can still have a long term adverse effect on future finances not to mention the credit rating.
by: Steve Smith
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