IVA which stands for individual voluntary arrangement is actually a formal as well as legally binding settlement process between you & your creditors in order to pay back the debts over a certain period of time. It means it’s authorized by the court & your lender has to stick to it.
Individual Voluntary Arrangement can be flexible in order to suit all your requirements but it can be pretty costly & there are certain risks to consider too!
How an IVA works
An Individual Voluntary Arrangement needs to be set up by a licensed person, called an insolvency practitioner. It'll be an accountant or a lawyer. And the insolvency practitioner will charge a certain amount of fee for the IVA. Always keep in mind that these can often be potentially high as well as are based on the amount you repay through the individual voluntary arrangement work. Your hired insolvency practitioner will directly deal with your lender throughout the life of the Individual Voluntary Arrangement.
So, if you opt for a professional debt management firm for an IVA, try to figure out how much fees they can charge before you determine. A professional debt management firm is likely to be more costly as they charge a certain amount of fees on top of the insolvency practitioner's charges.
How the repayments work
So if you decide to get an Individual Voluntary Arrangement, then you'll work out a repayment scheme with the insolvency practitioner. It can be a lump sum payment, a monthly payment, or even a combination of both.
This repayment scheme must be based on the amount you can easily afford & the lenders will have to agree to it. So in the case of the monthly payment, the Individual Voluntary Arrangement can last for 5 or 6 years.
Any fees will be directly paid to the insolvency practitioner. And they'll distribute the money to your lenders.
However, if you are not able to provide enough to pay your debts in full by the end of your IVA, then you won’t have to pay the rest. The insolvency practitioner must advise you about this.
If you come into money
And, in case, if you get a windfall during your Individual Voluntary Arrangement, for instance an inheritance, it'll be taken & paid to your lenders. So, if you figure out that you are due a certain amount of money because of some circumstances that occurred before the IVA, your lenders may have the right to claim it as well - even if your Individual Voluntary Arrangement has finished.
On the other hand, you can always get in touch with your nearest Citizens Advice for expert assistance if you get a lump sum after your Individual Voluntary Arrangement finishes.
It, also, becomes mandatory if you are burdened with huge debts.
Save money not only for emergencies, but to accelerate the debt management plan.
It will help you maintain good credit reputation and that will eventually support in clearing your debts timely.
Make Savings Plan to Reduce Debts
As you set a goal and save a few hundred pounds every month, you will be in a better position to make affordable debt repayments.
The best is to keep adding 1% or more as per your feasibility – every year you get a raise until you reach the set goal of how much you want to save from your earnings.
IVA is an agreement with your creditors, where we pay all or part of your debts.
You will fill the form in that you have to agree to make regular payments to an insolvency practitioner, who will share this money between your creditors.
We give you full control of your assets than bankruptcy.
So for more information on how to enter an IVA (Individual Voluntary Arrangement), please visit our website and get the best IVA services.
