|
Home
Basic Facts
Where to Get
Getting Best Deals
Your Credit Score
Credit Report Errors
Other Options
Submit a Website
Personal Finance Articles
Financial Directory
|
Debt Relief and the Role of Individual Voluntary Arrangements
Ever since the Insolvency Act of 1986 introduced Individual Voluntary
Arrangements (IVAs) as an alternative to bankruptcy proceedings there
has been a certain mystique surrounding IVAs. The following is an attempt
to demystify the mystique of IVAs and show you the role that IVAs can
play in your debt relief process:
- IVAs are a legally binding contract between you and your creditors.
- IVAs are an agreement in which you agree to settle your debts over a
maximum period of 5 years.
- IVAs are drafted by Insolvency Practitioners, on your behalf, based
on what they believe to be a realistically affordable repayment plan.
- IVAs involve an investigation by the Insolvency Practitioner into your
current financial status to determine what your income is, what your assets
are, and what your total debts are that need to be repaid.
- the IVA affordable repayment plan can be 60 or less monthly repayments
or what is called a one-shot bullet repayment. In the case of the former
you are most likely going to be repaying your debt from your income. In
the case of the later you are most like going to be repaying your debt
from the sale of one of your assets.
- unlike your previous repayments, repayments under IVAs are made into
a special fund that the Insolvency Practitioner has overall control of.
The Insolvency Practitioner will then make the repayments to your creditors
in accordance with the agreed terms of the plan.
- in order to be approved by your creditors, IVAs need overall approval
from 75 per cent of your existing creditors.
- once approved by 75 per cent of your existing creditor the IVA plan
comes into effect and your existing creditors have to agree not to charge
you interest on the debt during the period of the plan, nor try and enforce
the debt through the courts.
As you can see then, IVAs were introduced to streamline the bankruptcy
system so that it was no longer clogged down with small individual debtors
who could probably benefit far better from an alternative scheme of arrangement
with their creditors. |
|
