Benefits of an IVA

For those who are thinking of filing for bankruptcy, there is another option that may be available to solve their financial problems. This option is the Individual Voluntary Agreement or an IVA, in which the debtor and the creditor agree on the repayment of a portion of the debt amount during the time period of IVA, usually five years. After an IVA, all the outstanding debt amounts are normally written off. In most cases, the debtors begin the procedure of starting an IVA. But if the debtors are un-discharged bankrupts, then the trustees, the official receivers or bankruptcy courts may decide an IVA is more suitable than bankruptcy and start the proceedings themselves. The main idea of an IVA is the protection of assets, such as the home and car, which are put at risk in case of filing for bankruptcy.
 
Increased amounts of debts can affect people belonging to any income group, and more and more of them are using an IVA to save their assets and their future. An IVA company will help the person through the IVA procedure, where the experts will advise their clients on what actions they should take. The success of an IVA proposal depends upon the final decision of creditors. An Insolvency Practitioner acts as the intermediary between the debtor and the creditors. The Insolvency Practitioner is the person authorised for over-seeing the IVA procedure. The IVA company first analyses the case and if it finds that an IVA is suitable will help the debtor put together a proposal to their creditors. Choosing a good company is a crucial thing to do and it is better to select the one which is recommended by a friend or relative. After selecting a good company, the person should be able to discuss all the aspects of his or her financial as well as personal situation with the advisor, who generally has enough experience and knowledge about the IVA process. The second thing that has to be kept in mind is that most of the IVA companies offer free initial consultation and paper work, therefore, it is better to avoid the one who charges fees for doing this. Finding the best IVA company is very important, as it will be presenting the proposal to your creditors.
An IVA, or Individual Voluntary Arrangement, is a legally binding agreement made with your creditors to pay off a percentage of your debt through a single monthly payment, usually over a five year period. After the IVA is completed, any remaining balance is usually written off. An IVA must be ‘supervised’ by a Licensed Insolvency Practitioner, who will oversee the collection of payments from the debtor, distribution of payments to the creditors, and ensure that the terms of the proposal are adhered to. An IVA can be a great way to settle financial problems of people who are heavily in debt. 

There are many benefits of an IVA such as:

• The period of an IVA is for a predetermined period, usually up to five years.
• It brings peace of mind as you would no longer have to face demands for payments by your creditors either by letter or telephone once the IVA is approved.
• Interest and late payment charges are stopped once an IVA has been approved by the creditors. The addition of further interest or charges is prohibited by law.
• The debtor will put forward a proposal for repayment of a percentage of their debt based on what they can afford to pay monthly. Additionally, the proposal may include a lump-sum payment, such as from a relative or release of equity in a property.
• An IVA is recorded by Credit Reference Agencies for 6 years from the acceptance date. One benefit of an IVA is that successful completion shows new creditors that a person is committed to paying their debts on time, helping to improve their credit rating.
• Once the IVA is agreed by IP and approved at the creditors’ meeting, all creditors will be bound by the arrangement and will be unable to chase for repayment outside the IVA.
• As long as the debtor adheres to the terms of the IVA, creditors are not able to take any legal action against them to recover debts. All repayments to creditors must be via the IVA Company.
• Entering into an IVA is a completely a private issue between a debtor and his or her creditor. Unlike bankruptcy, an IVA will not be advertised in local newspapers.
• The greatest advantage of an IVA is that it has no adverse effect on the professional status of the debtor. In bankruptcy, there are restrictions on certain employment types, such as accountants and people holding public office.

Most IVA companies do not take fees until after the IVA is accepted. If the company you choose does charge fees, make sure they will be refunded if the IVA is not accepted.