card guide
IVAs – what are they?
An IVA is an individual Voluntary Arrangement, and has become known as the softer alternative to bankruptcy for those with high levels of unsecured debt.

An IVA is a legal contract that is between the borrower and his or her creditors, and relates to the repayment of the debts that the borrower has with the involved creditors. Unsecured debt levels in the UK are at sky high levels these days, and many people are in debt for amounts that they will never be able to repay. Many others are struggling with repayments to the point where they cannot possibly keep up with the amount that they have to pay out based on the amount of income they are earning. This is where an IVA may help.

It is important to point out that an IVA is not a solution that is available to all people in debt, nor is it a process that should be taken lightly. If you are eligible for an IVA you should ensure that you give it plenty of consideration, as this can affect your financial future for many years to come in terms of your credit rating and your ability to get finance again in the future. On the upside, those buried in debt could find that with an IVA they are able to get out of debt much faster and can then look at starting again with a fresh slate.

The IVA was actually introduced in the 1980s, but until recently many people had not heard of this process. However, with unsecured debt reaching record levels and many borrowers falling behind with their repayments an increasing number of companies have started to advertise IVAs as a means to help those in high levels of debt to get out of debt more quickly. In addition to reducing the term of the debt, IVAs also aim to reduce the monthly repayments made by the borrower to a feasible and affordable amount based on income, and also aim to reduce the amount that the borrower has to repay to the lenders.

An IVA could reduce the amount that you have to repay in total by up to 75% in some cases. You will usually make a set repayment to the IVA agent each month for a period of sixty months, at the end of which any outstanding balance will be written off and you will be free of your debts. The monthly repayments is worked out based on your income and outgoings, but is always a repayment that is affordable. Your assets are protected under this programme, so you do not risk losing your home. However, do bear in mind that only unsecured debts can be considered for an IVA programme, and secured debts such as your mortgage will remain your responsibility.

You do have to meet eligibility requirements in order to be considered for an IVA. Either yourself and your partner will need to be in full time employment, and you will need to have unsecured debts of £15,000 or more. You should also remember that in order to be accepted for the IVA programme there must be a majority vote from your creditors stating that they are willing to accept the IVA plan, otherwise the IVA will fail.

There are a number of companies that claim to be IVA specialists, but you need to remember that in many cases these companies are out to make a profit, which means that they will add their own costs to the IVA. Both you and your creditors will benefit more from using a fee free agency, and there are a number of these around. The Citizen's Advice Bureau or a debt charity such as the Consumer Credit Counselling Service can usually offer advice and assistance to those wishing to find out more about the IVA process.

Posted on: [ December 04, 2018 ]       Add to Del.icio.us   Digg it   Add to Blinklist   Add to FUrl   StumbleUpon