Our calculator will help you to decide whether an IVA is right for you.
IVA or Individual Voluntary Arrangements are formal alternatives to bankruptcy available in England, Wales and Northern Ireland. If you want to know all about IVAs, then you must first understand that these are contractual arrangements between the debtors and the creditors making the terms of repayment flexible depending upon the debtor’s income, capital and third party payments. Through an IVA, a debtor attempts to reach a repayment settlement with the creditor so that the conditions are made a little lenient, making it convenient for the debtor to repay his or her loan.
There are several reasons why an increasing number of people in UK are giving preference to IVAs as compared to bankruptcy. Normally, a bankruptcy is made public through newspapers and other announcements, while an IVA is kept confidential between the creditor and the debtor. As far as an individual’s credit rating is concerned, an IVA can be considered to be a more positive action than bankruptcy. This is because an IVA means that the debtor is still committed to making the repayment. Usually, the term of an IVA lasts for 5 years but it may differ depending upon the debtor’s financial status and ability to repay every month. Unlike in bankruptcy, IVA does not restrict the debtor from getting credit, although this usually requires approval from the supervisor of the case. Also, the debtor is not forced to dissolve the partnership or resigning from the directorship of a business, unlike in bankruptcy.
Once the creditors have agreed to follow an IVA agreement, they are not allowed to call the debtors again and again and ask for the repayments. The biggest advantage of IVA over filing bankruptcy is the authority of the debtor over his or her property. In bankruptcy, all the assets of the debtors vest with the trustee. As this also includes the equity, the trustee has right to sell it out. An IVA can exclude the assets altogether, although if any equity is held in the property it is usual for a portion of this to be released through a re-mortgage and entered into the IVA.
An IVA can give a huge relief to the debtors as the creditors are not allowed to make threatening calls any more, the property of the debtor is not at risk. If you want to know all about IVAs, then it is wise to contact a professional insolvency practitioner who will be able to provide your total guidance.