The ultimate IVA definition is quite simply…… Individual Voluntary Arrangement.
An IVA, or individual Voluntary Arrangement to give it its full name, is a formal debt solution, aimed to assist people with an overburdening debt problem. An IVA provides the structure of a ‘new agreement‘ with their creditors to act as an alternative to bankruptcy for those people whose incomes or assets might otherwise be vulnerable under bankruptcy’s terms and conditions.
An IVA can only be administered by a licensed Insolvency Practitioner, and an applicant must establish their personal circumstances qualify them for an IVA before they make a successful application. Take this link to see if you qualify for an IVA.
All IVA’s have a predetermined term, which is usually 5 years, (though in the correct circumstances there could be just a Lump Sum payment as part of a Full and Final IVA), and during the IVA’s term the applicant agrees to repay to his creditors whatever he can afford after his personal living expenses have been taken into account.
At the end of the pre-arranged term, the applicant is considered debt free, even if they have not actually managed to repay their full outstanding debt to their creditors. This is because any amount left outstanding after the successful completion of the IVA must be written-off by the creditors under the terms of the IVA
As well as protecting assets such as the equity in a property, an IVA can also protect assets such as vehicles of a higher value than the Official Receiver would normally allow under bankruptcy terms and conditions.
Once an IVA has been agreed by the necessary percentage of creditors, the IVA becomes legally binding, on all of them, which means the terms of the IVA are protected by law. Creditors are not allowed to try to change the terms of the IVA should they want to.
The terms of the IVA also requires a creditor to cease charging interest on all the debts in the IVA. They must also stop adding late payment charges or fines to the balances either.
There are several standard terms that are included within the IVA proposal, one of which stops creditors from contacting the client once the arrangement has begun.
These are the key points within the IVA definition that highlight the advantages of the IVA from the point of view of the applicant.
However, there are also disadvantages with an IVA and it is important to full understand how these will affect the debtor before entering into an IVA.
My IVA adviser can offer you a ‘no obligation’ IVA consultation and the opportunity to fully explore the IVA option, before you commit to making an application.
To arrange an IVA consultation just call 0800 088 7503.
Read this article for a full breakdown of the IVA process.
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