A Bankruptcy Lawyer’s Blog

What is an IVA? And How Does it Work?

The state of the present financial market has left a majority of the nation in debt. It has left people without jobs and with bills piling up and debt collectors turning up on your door step; the pressure and stress can prove to be too much for people to handle.

What can be done to help you resolve the situation and relieve the immense pressure you are feeling? Looking at an Individual Voluntary Agreement could be an option, many people are unaware of what this is, it is otherwise known as an IVA.

If you feel your debts are out of control and you are not sleeping due to the worry and stress of it all, an IVA may be able to help. An IVA is a contract that is put in place by a licensed insolvency practitioner it will be a binding contract between you and your creditors, it means that you can decrease the payments of the full amount owed. IVA’s are ideal for people who are on the brink of bankruptcy.

With an IVA the creditor will almost always have to make compromise on the money that is owed to them. The insolvency practitioner is the person who decides on how much the debtor can afford, by looking into their earnings to see how much they can realistically afford each month this normally means that the creditor will lose money.

There is certain information required from them the debtor for them to be eligible for an IVA, it is not available to everyone. To qualify for an IVA you will need to be in steady employment and be able to prove that you are earning enough money to live on after paying your loan.

A contract between both parties will be drawn up when the payment terms have been decided and agreed. The contract agreement cannot be changed once the contract has been signed by the creditor and debtor, meaning the creditor can no longer chase for payments as all interest and debts must be frozen the debt cannot be pursued and the creditor cannot initiate legal action to recover the money lost.

To meet the requirements of an IVA you will need to have an unsecured debt of 5,000 or more, you will be asked to supply earnings to prove that you cannot afford to pay the loan back every month. IVA’s are normally paid over a period of 3-5 years. An IVA is a good alternative to bankruptcy but it is important to remember that it will have an effect on your credit rating.

Final comments

Individual Voluntary Agreements have been around for about 20 years and are very popular, they are not suitable for everyone, however they have helped many people in the past. If the debtor meets all the required payments on time and the debt has been cleared they could find that up to 70% of the debt has been removed. To find out how to qualify for an IVA search online.

Steve Smith writes for All About Loans. Our visitors can apply online for bad credit secured loans. We also specialise in the cheapest loans online, and UK consolidation loans. Visit today: allaboutloans.co.uk/.