Are you struggling with unmanageable debt? Are you feeling hopeless and defeated? If so, you may be considering an IVA as a way to get your finances back on track.
An IVA, or Individual Voluntary Arrangement, is a legal agreement between you and your creditors that allows you to consolidate your debts into one monthly payment.
In this post we will delve into IVAs in more detail, including how IVAs work, what debt is included and what are teh key benefits.
What is an IVA?
An IVA is a legally binding agreement between you and your creditors to repay your debts over a set period of time, usually 5 years. To be eligible for an IVA, you must owe at least £5,000 to two or more creditors, and you must be able to afford to make regular payments towards your debt.
If you enter into an IVA, your creditors will agree to freeze interest and charges on your debts, and they will not take any further action against you. If you make all of the payments required under your IVA, the remaining balance of your debt will be written off.
How does an IVA work?
An IVA is a formal agreement between you and your creditors, and it is overseen by a licensed insolvency practitioner (IP). You will make regular payments towards your debt for a set period of time, usually 5 years. At the end of your IVA, the remaining balance of your debt will be written off.
What debts can be included in an IVA?
Most types of debt can be included in an IVA, including unsecured debts such as credit cards, personal loans, and overdrafts. Others include payday loans, store cards and council tax arrears.
Secured debts, such as mortgages and car loans, cannot be included in an IVA. However, if you are struggling to make the payments on your secured debts, you may be able to negotiate with your creditors to extend the terms of your loan or to lower your monthly payments.
What are the benefits of an IVA?
There are several benefits of an IVA, including:
1. You will make affordable payments based on your income and expenditure:
If you’re struggling to keep up with your debt repayments, an Individual Voluntary Arrangement (IVA) could be a good solution for you. With an IVA, you’ll make affordable payments based on your income and expenditure. This means that you are less likely to fall behind on your repayments and risk incurring additional fees and charges. Plus, if you stick to the terms of your IVA, any remaining debt will be written off after a set period of time
2. Your creditors will agree to freeze interest and charges on your debt:
One of the main advantages of an IVA is that your creditors will agree to freeze interest and charges on your debt. This means that you’ll know exactly how much you need to repay each month, and you won’t have to worry about your debt increasing.
3. You will be debt-free at the end of your IVA:
If you make all of the required payments, the remaining balance of your debt will be written off at the end of your IVA. This is great news because it means you can start fresh and begin your debt-free journey.
4. Your creditors cannot take any further action against you:
If you enter into an IVA, your creditors cannot take any further action against you. This includes things like sending letters, making phone calls, or taking legal action to recover the debt. This gives individuals who are struggling with debt some much-needed peace of mind.
5. Your assets are protected:
Another advantage of an IVA is that your assets are protected. This means that your home and car are safe from being repossessed, and you can keep any essential belongings that you need to live a comfortable life. This individuals have a lot less stress and anxiety about their debts.
An IVA can be a great solution for individuals who are struggling to repay their debts. It’s important to remember, however, that an IVA is a legal agreement, and you will be required to make regular payments for the duration of your IVA. If you fail to make a payment, your creditors may take legal action against you.