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An individual voluntary arrangement, or IVA, is a formal debt solution, which is designed to help individuals struggling to meet their financial obligations. An IVA achieves this by limiting the expected payments to an affordable level based on the debtor’s affordability. This can help the debtor to remain up-to-date with secured debt repayments, such as mortgage or hire purchase, and also the cost of living.
What is an IVA?
Terms of IVAs include a legally binding process in which unsecured debts are frozen for the period of the IVA, including charges and interest. After the IVA has concluded, any remaining debt is written off, and the debtor becomes free of the burden of unsecured debts. An IVA includes certain terms and conditions for ensuring that it works suitably for the debtors as well as the creditors.
Terms of IVAs
The IVA protocol is been introduced to regulate the IVA industry in a more efficient manner. The protocol basically aims to make sure that IVA is managed within a definite fashion for maximising the returns of the creditors while still offering a debt solution for the debtors.
To begin with, the IVA procedure, the debtor fills a standard application form and includes all the correct details of expenditure and income. The Company providing IVA will then use the given details for drafting a proposal that is offered to the debtors for approval. Once sanctioned, the proposal is opened to the creditors for voting. If any creditor is in the procedure of petitioning for debtor’s bankruptcy, the IVA Company can apply for the interim order, averting the bankruptcy proceedings.
A general overview of the IVA terms and conditions:
The debtors and creditors are obliged to stick to the terms and conditions of IVA. Provided that debtors continue the payments as mentioned in the approved proposal, the creditors will get regular payments against the amount outstanding. After a certain period of time, generally five years, the Individual Voluntary Agreement is concluded and the debtor will be issued an official certificate of completion. At this point, any unsecured debt is written off.
When the debtor is unsuccessful in making the agreed payment then the insolvency practitioner has the right to declare the case within default and issue a notice of failure. Once the case is failed, the creditors can again petition for debtor’s bankruptcy. While looking for an IVA Company make sure that it provides non-judgmental, high quality advice and works along you with right debt solution.