If you are struggling to pay back your debt, you may be considering getting an Individual Voluntary Arrangement (IVA). IVAs were created in 1987 as another option besides bankruptcy. If you choose to get an IVA, it will last 3–5 years and you’ll pay back some of your debt through a legally binding agreement with your creditors and write off the remaining debt. To find out if an IVA is right for you, read on to learn how to get an IVA.
What is an IVA?
An IVA is a debt solution that helps you pay back some of your debt through a legally binding agreement with your creditors and write off the remaining. To be eligible for an IVA, you must have at least £5,000 of debt and be unable to repay it within a reasonable period of time. The first step is to contact a licensed insolvency practitioner (IP) who will assess your financial situation and determine if an IVA is right for you.
If you decide to go ahead with an IVA, the IP will work with you to develop a proposal that outlines how much you can afford to pay back each month and how long the repayment period will be. This proposal will then be presented to your creditors for approval.
The Pros of an IVA
An IVA can be a great debt solution for many people. It can help you pay back some of your debt, and it can also help you write off the remaining debt. Plus, an IVA is a legally binding agreement, so your creditors cannot change the terms of the agreement. And, if you make all of your payments on time, you will be able to get your name removed from the IVA register after five years.
The Cons of Getting an IVA
You will be required to make regular payments for a set period of time, typically five years. During this time, you will not be able to obtain any new lines of credit or take out any loans. Your creditors may still contact you during this time period.
Once the agreement is in place, you cannot change it or cancel it without the consent of your creditors. If you miss a payment or default on the agreement, your creditors can take legal action against you, which could include wage garnishment or seizure of assets. Once the agreement is completed and all debts are paid off, it will be recorded on the IVA register, which is a public record.
How to Get Started With Your Application
The first step is to formalize your agreement with your creditors by registering for an IVA. This will bind you and your creditors to the terms of the agreement and help protect you from any legal action they may take. Once you have registered, you will need to provide basic information about your finances and debts.
This will help your creditors determine how much they are willing to write off. After that, you will make monthly payments toward your debt. The amount you pay each month will be based on what you can afford, but it must be at least the minimum required by your creditors. If you miss a payment or default on the terms of your IVA, your creditors may take legal action against you.
Creditor Approval Process
Once your application is approved, you’ll need to get approval from your creditors. This usually involves a vote, and you’ll need at least 75% of your creditors to agree to the terms of the IVA. If they do, then you’ll sign a legally binding agreement with them and make monthly payments for a set period of time (usually 5 years). At the end of that period, any remaining debt will be written off.
Other Things To Keep In Mind While Applying For An IVA
- Your creditors must agree to the terms of your IVA.
- You will need to have a source of income to make monthly payments.
- You will need to provide detailed information about your debts, assets, and financial situation.
- An IVA can last up to five years.
- Once the agreement is in place, you will make monthly payments toward your debt.
- At the end of the IVA term, any remaining debt is written off.
If you’re struggling with debt, an IVA may be a good solution for you. You can learn more about how an IVA and other debt-relief options can help you debt write off on Monemyst.