Your Best Debt Solution: An Individual Voluntary Arrangement

Chances are, your finances will have been negatively affected by the current economic downturn - what with the recession, rising unemployment and the global credit crunch. If this is the case, you may be in need of an effective and simple way to get out of debt. You may want to consider an Individual Voluntary Arrangement (IVA) and read this IVA advice. If you're unsure how an IVA could apply to you - check out the following article.

For immediate help with your debts please call The Debt People on 0161 927 8001 today.

What is an Individual Voluntary Arrangement?

An Individual Voluntary Arrangement (IVA) offers a way for people who are experiencing difficulty repaying their unsecured balances to avoid bankruptcy. Unsecured balances include debts which are not guaranteed by (“secured to”) a property, such as overdrafts, personal loans, store cards and credit card debts.

IVAs can only be arranged through a licensed insolvency practitioner, who will calculate a formal proposal to your creditors, based on how much you can afford to repay. This is based on a detailed assessment of your finances and household situation.

Your repayment plan would then typically involve making a regular monthly payment to your creditors, paying them a lump sum, or a mixture of the two. If you own your own home (either outright or with a mortgage) your creditors may ask you to agree to pay them all or part of the equity that you own in the property to pay towards the amount that you owe. This may mean re-mortgaging in the later years of your agreement, but would still ensure repayments are affordable to you.

The payments you make towards your IVA will usually be over a five year period (three in Scotland) and will usually be significantly less than the total amount of debt that is owed. These payments will be distributed by your insolvency practitioner on your behalf to each of your creditors, on a pro-rata basis.

The IVA becomes legally binding on both you and your creditors once 75% of your creditors (by value) agree to accept your insolvency practitioner's proposal. This means that creditors will freeze any additional interest and charges on your debts once the IVA has been accepted. They will also accept your payments as a full-and-final settlement of your debts - as long as you keep to the terms of the IVA agreement - even if the amount you end up paying is less than the amount you originally owed.

If you fail to keep to the IVA terms your creditors could apply to make you bankrupt instead.

For immediate help with your debts please call The Debt People on 0161 927 8001 today.

What does an IVA cost?

Insolvency practitioners are qualified professionals, many are accountants and lawyers, so they will charge a fee for setting up and supervising an IVA – however most will offer free debt advice. Fees are depending on each case, and on the amount of debt owed along with the complexity of the case. The fees for an IVA are taken from the amount that is affordable to you, so you will not be landed with a large bill during or after the term - they will simply be subtracted from the payments that you make.

Who will know about my IVA?

The individual insolvency register - a public register maintained by the Insolvency Service - lists details of all current IVAs. Your credit file will also show details of an IVA and they will be held on file for six years, or until the date the IVA ends - whichever is longer.

For immediate help with your debts please call The Debt People on 0161 927 8001 today.

How does a DMP help me deal with debt?

DMPs help people who have developed outstanding amounts on their unsecured balances to regain control of their finances whilst still repaying what they owe. This is done by gathering all repayments towards their unsecured balances into one single monthly payment - which is generally lower than the current contractual payments. As part of our service we negotiate with creditors to reduce (or freeze) the interest and charges on accounts, and reschedule repayments over a longer period of time - thus making repayments more affordable.

Who are IVAs useful for?

There are certain criteria that need to be met to make an IVA work, which depends on the level of debt you have and the amount you can realistically afford to repay over the IVA term. Generally, IVAs are most suitable for people with unsecured debts over £15,000. Other debt solutions include debt management plans, debt consolidation loans and Trust Deeds.