An IVA stands for Individual Voluntary Arrangement
, which is a legally binding on you and your creditors. People opt for IVA when they have no real option of paying off their debts. To get an IVA you need to get a licensed insolvency practitioner who helps you to work out what you can afford to pay off and the time it will take you to pay off your debts.
Thus, an IVA is a legally binding between you and your creditors. It helps those who are suffering from financial problems or are in debt, to make a formal application to settle their outstanding debts.
Monthly payments are settled upon and based on an affordable disposable income. Once the final instalment is made, any outstanding debt is legally written off. The arrangement can write off up to 65% of your debts (This is subject to your circumstances). Debts are settled within a reasonable and fixed period of time (this is usually 5 years). Any interest and financial charges are frozen and creditors will be prohibited from demanding any additional payments. During the period of your IVA arrangement, your financial situation will be reviewed regularly for monitoring to see if there has been any change in your circumstances.
Following are the benefits of opting for an IVA You have complete knowledge of what amount to pay each month and for what period You are fully protected from any further actions of creditors or debt collectors The interest and charges by your creditors are frozen All unpaid debts are written off when the IVA ends No public notices are made
Majority of IVA cases are based on one monthly payment, spanning a period of 5 years, making it a total of 60 payments. This one monthly payment is based on what you earn minus your monthly expenses. When an IVA is accepted the IP's role becomes that of a supervisor, monitoring the IVA's progress and ensuring that the terms and conditions that were agreed upon with at the creditors meeting are properly adhered to.
You will be bound by your IVA so you have to be absolutely sure that you will not default on payments. An IVA agreement is bound by law and you cannot afford to shirk it.
The IVA option to help people out of debt has been implemented by the government.
It's a way to help people who cannot pay off their debts and don't want to declare bankruptcy or be sued by creditors. Creditors cannot harass you while you are repaying your debts as per the IVA agreement.