The Possibilities Of An IVA
An Individual Voluntary Agreement (IVA) can aid anyone who is having problems paying back their debt. It is an especially persuasive option to family’s who would risk losing their home if they became bankrupt.
An IVA can help you if;
Your creditors have declined an informal debt management agreement
You have already had an informal arrangement, but you could not meet its terms.
You have so many creditors that an informal debt management arrangement would not be practical. You could be made bankrupt, or you have already become bankrupt and you want to reverse that position. You previously had an informal arrangement, but you could not keep up withits provisions.
Your creditors have not agreed to an informal debt management arrangement
You are being made bankrupt, or you have already become bankrupt and you want to alter that situation.
You are in debt to so many creditors that an informal debt management agreement would be impractical.
You may have a small company which you would be unable to keep running if you became bankrupt. You would be made redundant if you became bankrupt, jobs such as solicitor, accountant, the armed forces, police. You have a significant amount of capital but it is still not enough to completely repay your lenders. You want a formal arrangement with your creditors to accept that lump sum and write off the balance of what you owe.
You have equity in your house. You will not necessarily lose your house if, with the agreement of the IP and your creditors, it can be kept out of the Individual Voluntary Agreement (IVA). However, your creditors will usually want the maximum amount of the equity in your house as they can acquire. With an IVA you are less limited restricted than with bankruptcy. EG, with an Individual Voluntary Agreement (IVA) you don’t have to tell your building society. So you will still be able to use your bank account.
And the disadvantages?
If you fail to comply to the conditions of your IVA, then the Insolvency Practitioner who is supervising your Individual Voluntary Agreement (IVA) or your lenders, can petition for your bankruptcy.
If the vast majority of your lenders do not acquiesce to your proposed IVA you are subsequently back to where you started. It will be 12 months before you can make another IVA proposal. You should carefully consider your paperwork.
If you are a property holder, it could be that under the terms of the Individual Voluntary Agreement you have to sell your house. An alternate method is to include a clause in your IVA where you have your home valued after an prearranged amount of time with the aim of releasing the “equity” in your home at that time, to your lenders. Your lenders may agree to you paying monthly IVA instalments for an additional year to cover the amount of equity in your home.
If your money situation alters and you can’t afford the payments, unless your Insolvency Practitioner can coerceyour creditors to accept a revised contract, your IVA will end. This can mean you are facing bankruptcy.