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An Individual Voluntary Arrangement (IVA) is a formal agreement between you and your creditors; it allows you to make payments lesser than you actually owe. It is an alternative for people who wish to avoid bankruptcy, and can also be adopted by people who are already bankrupt.
Insolvency Act 1986 was the parent enactment of IVA. An Insolvency Expert presents a scheme in front of the creditors. The requirements and the financial conditions of the debtor are the main issues that are to be considered while plotting the proposal. IVA not only facilitates the debtor but also supports the creditors as through this agreement one has to pay the amount decided among both of them. This payment is far better for the creditor than no payments, as in case of bankruptcy. But surely, a cooperating settlement must be made between the two parties.
There are numerous advantages one can have through an IVA. It is a hopeful agreement for the debtor, which ensures him that he can pay off an affordable amount of money in a specified time period. Usually, IVA helps the debtors to get free of their debts within 3 to 5 years duration. The terms of IVA are settled such that the debtor is supposed to pay a fixed amount every month in accordance with his income and affordability. The creditors can neither add up to your payments nor they can boost interest on that money; they cannot even harass you for money once they have reached a settlement through IVA. Therefore, you are at ease in paying back your debts in a short span of time with all the comfort.
IVA serves in many other ways as well. It prevents a lot of problems like loss of reputation or honour which you have to face in case of a bankruptcy filing, which is advertised in newspapers. Usually, in case of bankruptcy, most of the people have to face the consequences in shape of resignation from their jobs, or they need to unveil the information to their colleagues. But in the case of an IVA, it is entirely different; it provides secrecy and confidentiality. And moreover, the best part of an IVA is that the debtors do not have any charge over the property or the valuables of the creditors and the creditors have the complete hold over their belongings without fear of a legal action.
IVA is a rational and equitable choice for the debtors as it provides you simpler solutions than considering bankruptcy as the last option. On the termination of the IVA time period, the lingering debts are assumed to be paid. Moreover, these remaining debts do not stress the debtor as he is sure of no legal action against him in this case.
IVA should not be taken up as a joke or a tall story only because it ensures you a debt free person after 5 years period. But, people opting for an IVA must make sure that they make payments in accordance with the decided time; otherwise, they can face legal action in the future.
Edward Woodwards is a financial consultant. You can take iva advice and solutions to debt problems. Find out more detials at his recommended website http://www.iva.org.uk.
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