IVA Help & Advice
An IVA allows you to clear debt which you can’t service and ultimately become debt free in 5 years. If you are considering bankruptcy it may well be the best course of action for getting your finances back in order. Provided you have unsecured debts in excess of £15,000 and are having trouble staying on top of repayments, an IVA (or Trust Deed if you live in Scotland), could well be the most sensible route.
What is an IVA?
An Individual Voluntary Arrangement
(or IVA) is essentially an agreement between yourself and your creditors which asserts that you will make available funds to be distributed between the parties owed who are stated in the agreement. Generally this distribution is carried out by your IVA or Trust Deed supervisor to whom you make monthly payments over an agreed period of time. If you posses certain assets, for instance endowment policy equity- you may be liable to make a portion of it available to property creditors.
How Do I Get an IVA?
If you are resident in England or Wales you may apply for an IVA
, whilst those who live in Scotland can apply for a Trust Deed - provided you are unable to cover your debts and these debts total more than £15,000 and are due to more than one creditor. It is however worth noting that just applying for an IVA does not guarantee it will be granted, as the decision to accept lies partially with your creditors who must vote in favour of it (or least a majority of 75% of creditors). You are still permitted to apply if you are subject to a Bankruptcy Order and if your application is accepted your bankruptcy is annulled.
What Does an IVA Do?
If you are successfully granted an Individual Voluntary Agreement then you benefit from:
- A freeze on charges and interest
- The cessation of any legal action
- Cancellation of all existing CCJs
- An end to postal and phone demands from unhappy creditors
- The knowledge that you are actively setting about regaining financial stability.
In addition to this, an IVA brings about supplementary advantages over either bankruptcy or continuing to struggle with servicing debts:
- An IVA has none of the stigma or negative publicity associated with declaring bankruptcy.
- The debtor is permitted to continue as a company director or within a business where appropriate in order to earn the funds to live and cover their IVA payments.
- The debtor has a say in which specific assets are made available to creditors.
- Creditors who initially opposed the application of the debtor to be granted an IVA are still legally obliged to adhere to its terms.
- Creditors realise that in the vast majority of cases they will have to accept a lower sum than was initially owed.
As well as suiting the debtor, this form of debt settlement programme also allows creditors to claim tax relief against bad debts.
Overall IVAs are ideal for individuals who are on the verge of accepting bankruptcy and offer substantial benefits over other solutions in many instances. At HLPROnline.com we are on hand to guide and assist in all matters relating to IVAs or Scottish Trust Deeds.