Knowing how to arrange an IVA, or Individual Voluntary Arrangement can help you alleviate your debt and improve your finances in the long run. If you’re drowning in debts, an IVA may be the only way to get them written off so that you can finally move on with your life and start saving money again! You might be thinking that it’s impossible to arrange an IVA because they are just not affordable enough; however, this couldn’t be further from the truth!
An Overview of What is an IVA?
An IVA is a legal agreement between you and your creditors to repay your debts over a set period of time, usually five years. Your monthly repayments are based on what you can afford, and once the term is up, any remaining debt is written off. To be eligible for an IVA, you must be a resident of England, Wales, or Northern Ireland; be 18 years old or above; have at least £5,000 worth of debt, and owe money to at least two creditors.
Applying for an IVA
You must first be registered with an insolvency practitioner (IP) in order to apply for an IVA. To do this, you’ll need to fill out a short application form and provide some basic information about your financial situation.
Once you’re registered, your IP will assess your eligibility for an IVA and put together a proposal. If you agree to the terms of the proposal, it will be formalized in a legally binding agreement. From there, you’ll make monthly payments to your IP for five years, after which any remaining debt will be written off.
What Are Some Advantages of an IVA?
An IVA can be a very effective way of dealing with unmanageable debt. It can provide you with some breathing space and give you time to get your finances back on track. An IVA can also help you write off some of your debts, which can be a huge relief. And, if you stick to the terms of your IVA, it can be a very cost-effective way of dealing with your debts.
Disadvantages of an IVA
Although an IVA can help you write off some of your debts, it also has several disadvantages. For one, your name will be added to the IVA register, which is a public record of debtors. This can make it difficult to obtain new lines of credit or loans in the future. Additionally, you may have to give up some of your assets, such as your home or car, to repay your debts.
Can You Write Off All Debts with an IVA?
You might be wondering if you can write off all debts with an IVA. Unfortunately, this is not the case. You can only write off certain types of debts, such as unsecured debts. However, some of your creditors may agree to accept less than what you owe them.
Who Will Support Me Through My Arrangement?
Your supervisor will be a licensed insolvency practitioner (IP) who is authorized by the Insolvency Service. You can find a list of IPs on the IVA register. Once you have selected your IP, they will assess your case and decide if an IVA is right for you. even if it is only one missed payment.
What happens if the Trustee accepts your application?
If the Trustee accepts your application, you will be required to make payments according to your proposed plan. Payments can be made in monthly or biweekly instalments. You will also be protected from debt collectors and creditors, including County Court Judgements (CCJs), allowing you to focus on rebuilding your finances without being burdened by debts.
If you are unable to make payments, you will forfeit your rights under an Individual Voluntary Arrangement, which may result in repossession action being taken against you, even if only one payment is missed.
Can I apply if I work for myself, receive benefits, or am un employed?
Yes, regardless of whether you are self-employed, unemployed, or on benefits. However, if you can demonstrate that these circumstances are beyond your control, your creditors may be more understanding.
Before applying for an IVA, consider whether something in your life has caused financial hardship, such as losing your job or becoming ill, and notify creditors.
Role of Your Licensed Insolvency Practitioner (LIP) in the Process
Your LIP will be with you throughout the entire process, from start to finish. They will help you fill out and submit your application, as well as represent you in court if necessary. They will also be responsible for ensuring that your IVA is carried out according to the plan agreed upon by you and your creditors. Finally, they will help you file the required paperwork with the IVA register.
You can learn more about how to debt write off on Monemyst.