IVA Help

An Individual Voluntary Agreement is a method of avoiding insolvency for somebody who has outstanding debts by way of contractual agreement with creditors. What an IVA does is to cut the debtors debts and clear them within a fixed period at a level where the debtor can afford.

Part 8 of the Insolvency Act 1986 is the law which governs an Individual Voluntary Agreement.  This law generally constitutes cases for individual and company bankruptcy and how arrangements such as IVA should apply.  The appointed individual to see to insolvency proceeding between debtors and creditors should only be a licensed Insolvency Practitioner.

An immense deal regarding the debtor’s financial ability is considered for a flexible IVA.  The person may also need to provide a thorough file of his/her assets in order for creditors and IP alike, make a complete assessment and finally approve the IVA. These assets could either be savings, third party payments, and monthly profits.

For an IVA to take place, a panel of creditors assemble a creditors’ meeting.  Moreover, an Individual Voluntary Arrangements is more viable for both debtors and creditors since it provides debtors an organized form of payments and obligations whereas creditors get much more in earnings as opposed to gaining from bankruptcy.  In the proceeding, a certain percentage of votes should be considered before an IVA can be agreed.  Creditors represented by proxy or in person usually require 75% of votes for an IVA to be approved.  Then again, if most of the creditors are represented through business associates, friends and family, another series of votes are counted  where 50% from non-associated creditors should be reached.

The advantages of Individual Voluntary Arrangements is that it maintains and recover your credit score, it safeguards the individual’s home from possibly being foreclosed, and does not put the person’s job in danger.  IVA is also a strictly confidential arrangement which only the debtor, advisor, and creditors have knowledge of.  Unlike bankruptcy which requires to be announced in public, IVA also does not restrict the individual from obtaining new loans, credits, or mortgage.

A ceiling period of five years is given to the debtor who is under an IVA where he makes manageable monthly payments.  When the time period has been reached, the remaining debt is usually wiped clean making the debtor free from debt.  Another advantageous feature of an IVA is that it can write-off up to 50%-75% of the debt, although it does hold the person to put in a large amount of his revenue as possible.  Not knowing how to pay you debts is daunting, but with the proper IVA, advisors and creditors, your debt problems will ultimately get fixed in no time.