Debt Facts

An Individual Voluntary Arrangement, or IVA, can be the best way to solve your debt problems. These arrangements are designed to save you from drowning in the burden of huge debts. IVAs can solve the most complex of financial crises and help a debtor to avoid bankruptcy. Now for some debt facts; IVAs are provided by both debt management and specialist IVA providers, who deal with your creditors on your behalf. An IVA enables the debtor to repay a portion of their debts through a simple monthly payment, typically for five years. Any remaining debt is written off after this time.

An IVA is a simple, effective method of solving your debt problems with a solution that is tailored to your circumstances. With an IVA, your debts are frozen at the outset and creditors are not permitted to add any further interest or penalty charges. You then make a single monthly payment to the IVA Company for the life of the IVA. After the IVA is completed, any remaining debt is written off by your creditors.

Following are some important facts about debt management through an individual voluntary arrangement-

• An IVA provides an effective option for repaying your debts within a fixed time-frame, usually five years.
• The IVA Company will compile a proposal on your behalf based on the information you provide. This will help to ensure that the creditors receive the maximum possible return while maintaining affordable repayments for the debtor.
• You will usually be offered a face-to-face meeting with an IVA expert to discuss your options, answer your questions, and determine if an IVA is the right course of action for you.
• Provided that 75% (by value) of your creditors accept your proposal, it becomes legally binding on all of your unsecured creditors.
• The creditors may stipulate some modifications to the proposal during the creditors’ meeting. The debtor should go through these with their IVA Company to ensure they understand the implications of them.

Unlike a Debt Management Plan, an IVA is supervised by a licensed insolvency practitioner, who will handle all of the court paperwork in addition to correspondence between your creditors and you. Anybody considering an IVA as a method of writing off a portion of their debt should remember that the creditors will only accept a write-off if full repayment is unaffordable.

Some other debt facts to take into consideration; In the event of job loss, pregnancy or serious illness, the debtor can apply to their IVA Company for a payment holiday. If appropriate, the IVA Company will put forward a variation to the creditors to enable this payment holiday to occur. Additionally, an IVA will usually have a windfall clause whereby some or all of unexpected additional income is entered into the IVA, thus maximising the return to the creditors.