IVA
IVA means: Individual Voluntary Arrangement
An IVA is a formal arrangement made through the county court to pay an agree amount off your debts over a set period of time.
This generally means paying a high every month over a period of between three and five years, after which time the debt is considered settled.
Some IVAs can be arranged as a lump sum payment to creditors instead of monthly payments, while others are a combination of both.
But IVAs are not suitable for everyone, and are generally only worth considering where you either have a lump sum available to pay to creditors, or enough spare cash to make the regular monthly payments over the term of the agreement.
By law, all IVAs must be set up by an insolvency practitioner (IP), usually a solicitor or an accountant who is authorised to do this.
They will make the IVA proposal on your behalf, and then make an application to the county court for an Interim Order, stopping your creditors from taking legal action against you.
There are advantages to an IVA.
Unlike bankruptcy, where your details may appear in the local press, IVAs are not made public knowledge. And where bankruptcy might mean that you are unable to carry on working in your current job, with an IVA, your work can remain unaffected, with your employer knowing nothing about it.
You can also carry on trading in a business to generate income , while any professional status or ability to hold public office, will be unaffected. If you are successful and enter into an IVA and you have an endownment policy linked to your mortgage then you may be asked to cash it in and add the proceeds to the repayment arrangement.
Similarly, properties with a reasonable amount of equity can release some of that money in order to pay creditors.
If the IVA does not go ahead then you will have to go back to negotiating repayments with your creditors individually, and wait 12 months before applying for another Interim Order.
Once the IVA is agreed you are legally bound to its terms, with your IP supervising the arrangement and making sure that you make the payments.
Over the term of the IVA, you can expect your finances to be reviewed regularly for any changes in your circumstances.
When the term is complete, and all payments have been made, you will be free from your debts, regardless of how much has actually been paid off.
Surprisingly few people are actually aware that the option of an IVA even exists, but if you meet the criteria, it could be the most effective way of clearing your debts and making a fresh start to your finances.
Please do not enter into an IVA or similar agreement without having taken advice from a legal solicitor.
If you are not sure about something don’t do it or sign to it, follow your heart if in the slightest dought.
