The normal duration for an Individual Voluntary Arrangement (IVA) is 5 years, but in fact there are no restrictions on the minimum length of an Individual Voluntary Arrangement (IVA).
The majority of Individual Voluntary Arrangements (IVAs) are expected to last for 5 years but the supervisor of the arrangement, usually an Insolvency Practitioner, can extend the term to 6 years and more rarely 7 years.
The length of an Individual Voluntary Arrangement (IVA) is dependent on your circumstances and if your circumstances change so might the term of your IVA.
There are generally two ways to finish an Individual Voluntary Arrangement (IVA) early. Either you can pay it off early by making an offer to your creditors before the IVA has finished, or you can annul the IVA by declaring yourself bankrupt.
The first way would be to repay of your debt early. This is not as uncommon as you may think, especially for those who own a house with equity. If, when your Individual Voluntary Arrangement (IVA) begins, the equity in your property is not sufficient to clear your debt the Insolvency Practitioner will check its value annually so that any future increase in value can be considered.
Recently the value of property has risen steadily, so potential to end an Individual Voluntary Arrangement (IVA) through a re-mortgage is increased. As the Individual Voluntary Arrangement (IVA) progresses, the level of debt still owed reduces but equity in your property continues to grow. There comes a point when the debt is sufficiently reduced for a release of equity to clear the balance with a Full and Final settlement. If releasable equity levels grow quickly Individual Voluntary Arrangement (IVA) terms can be substantially reduced.
Another way to pay off an Individual Voluntary Arrangement (IVA) would be through a windfall payment. If you are the beneficiary in a will or you win a sum of money the terms of your proposal state that you must contribute a percentage or all of that money to the creditors through your Individual Voluntary Arrangement (IVA). This is likely to mean that your Individual Voluntary Arrangement (IVA) will finish early if not immediately.
Offering your creditors a lump sum payment, made available by a 3rd party, which is equal or similar to the outstanding amount still to be repaid through the IVA can also have its merits. Creditors like to have funds in their hands rather than the ‘promise’ of funds to come, and so this option is usually well received.
Read this article for further guidance on your IVAs Full and Final Settlement Calculation
If your circumstances change for the worse, however, and you are experiencing payment problems and are unable to pay your contributions any more your Individual Voluntary Arrangement (IVA) is at risk of failing.
The Insolvency Practitioner is bound as the supervisor of your Individual Voluntary Arrangement (IVA) to declare you bankrupt if there is no prospect of you being able to continue making your payments.
This is a most unfortunate situation for anyone to find themselves in, not least because most people entering into an Individual Voluntary Arrangement (IVA) are desperately trying to repay there debt and in most case made the conscious decision to attempt an Individual Voluntary Arrangement (IVA) in preference to bankruptcy at the outset.
If you are faced with serious financial difficulties and would like to speak to an experienced IVA adviser call 0800 088 7503 or download one of our free IVA guides designed to help you find an answer to your situation.
You’ll find the guides on the left hand side of the top part of each page of the site.
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