What does IVA mean and what does an IVA do?
IVA means Individual Voluntary Arrangement, and an IVA helps people who are struggling with their monthly debt repayments.
An IVA can do this because it is a legally binding agreement between the person who is struggling, the debtor, and the people they owe the money to, their creditors.
Creditors are asked to accept lower monthly repayments, which are based on the affordability to the debtor, rather than what the debtor was contracted to pay in the old agreements. If 75% of the value of the debts agrees to the new offer of lower monthly repayments, then the other creditors must also accept the IVA, meaning that even though they may have voted against the IVA, they are still legally bound by the new agreement.
Many people have different ideas of the benefits of an IVA, meaning that advice about IVAs can become confused or distorted, depending on what aspect of the IVA is being championed, but the meaning of an IVA for most people is the realisation of being set free from overwhelming debt, meaning less financial pressure and overall stress.
IVAs also have some other advantages too.
- IVA’s stop interest being charged on the debts, meaning the debt stops rising.
- IVA’s stop late payment charges on the debts, meaning no more penalty charges.
- IVA’s are a fixed term of 5 years, meaning debt freedom in a fixed time period.
- IVA’s also stop the creditors being able to take legal action against the debtor too, meaning property and incomes are protected.
This is all because the IVA is a legally binding agreement, meaning that creditors are legally bound to the IVA for the full term. Being legally bound means that even if they want to change their mind, they can’t. Creditors also sacrifice their ability to contact the debtor directly, meaning that annoying phone calls tpo the debtor are brought to an end.
An IVA will usually have a fixed term of 5 years, after which the debtor is considered debt free. The meaning of this is that at the end of the IVAs term the debtor will be completely debt free, even if the debtor has not been able to repay the full outstanding debt before the end of the IVA.
So, to answer the question, “What does IVA mean and what does an IVA do?” quite simply, an IVA means debt freedom!
To have the IVA debt help solution explained in more detail visit our series of IVA articles or download a free IVA guide.
You may prefer to call our advisers on 0800 088 7503 who will be happy to explain the meaning of an IVA.
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