ADVANTAGES OF AN IVA
An Individual Voluntary Arrangement (IVA) is a formal agreement between you and your creditors, which allows you to make payments lesser than the amount you actually owe. It is an alternative for people who wish to avoid bankruptcy, and can also be adopted by people who are already bankrupt.
The IVA was established under the Insolvency Act 1986. The process includes presenting a proposal to the creditors with the help of an Insolvency Practitioner. The proposal depends upon the financial conditions of the debtor, and can be suited according to his requirements. An IVA is beneficial for the creditors as well because it ensures them a higher payback as compared to the situation in which bankruptcy is filed. However, a compromise has to be reached between the creditors and the debtors.
There are many advantages of an IVA. It reduces your debt to a level that is affordable and also reduces the time period in which you can hope to be debt free. On an average, most people who opt for IVA are debt free in three to five years. According to the terms of the IVA, you need to pay a fixed monthly payment that is according to your income and affordability. During the period of the IVA, the creditors can not increase your payments or the interest on it, and neither can they harass you for money. Thus, it makes the debt repayment process much simpler, and allows you to be debt free in a matter of time.
There are several other benefits of an IVA. It is a private agreement unlike a bankruptcy filing, which is advertised in the newspapers and leads to a loss of reputation and integrity. In cases of bankruptcy, people usually have to step down from their employment positions or disclose this information to business partners, but with an IVA, this is not the case. It can remain a confidential agreement. The biggest advantage however, is that unlike a bankruptcy case, an IVA does not give the debtors control of your property or valuables. You can remain in ownership of your home, and do not need to fear a legal action.
An IVA offers debtors an affordable option and ensures that bankruptcy is not the last resort. Upon completion of the time period of an IVA, the remaining debt is written off and the debtor is debt free, assuming that all payments have been successfully made. It offers peace of mind and relief from stress, as you can be sure in this situation that your creditors will no longer be harassing you for payments, or take any legal action against you.
Although an IVA can ensure that you are debt free in around five years, it must be kept in mind that this is a big commitment. People entering into an IVA must be sure if they can or cannot make the payments for the time period decided, or they may have to face legal action in the future.