What do you get with an IVA?

Adopting any approach in a business may backfire when you don’t know its outcome. Same is the case with Individual Voluntary Arrangement (IVA). Due to the recent downfall of the economy in the United Kingdom, more and more individuals are opting for an IVA to avoid the drastic effects of Bankruptcy on their financial status.
However, it is always good to know in advance what you can acquire with an IVA. In this way you can get the most out of it according to your circumstances. This is explained in the rest of this guide.

IVA – What is it?

An IVA is an alternate approach to avoid Bankruptcy introduced in part VIII of Insolvency Act 1986. It is one of the most commonly used debt consolidation methods in the United Kingdom. It is a legal process in which the Debtor and the Creditors agree on a repayment plan.

The Insolvency Practitioner devises this repayment plan according to the comfort of the Debtor. IVA usually covers the claim of unsecured debts. It is flexible to the Debtor’s circumstances i.e. you have to pay as much as you can after spending your income on basic necessities of life.

All of your unsecured debts are written off at the end of the IVA, which usually takes up to 60 months. There are two important characters involved in an IVA; Insolvency Practitioner (IP) and Relationship Manager.

The Insolvency Practitioner is an authorized or licensed professional whom you may hire for the formal procedure of IVA and negotiating with your Creditors. Insolvency Practitioners are usually lawyers or have an accounting background.

The Relationship Manager is your contact person, specifically assigned to you, who keeps track of the proceedings and makes sure that everything goes on smoothly during the process.

Clear Your Debts and Keep Your Property

Unlike Bankruptcy, when you opt for an IVA to eliminate your outstanding debts, your assets i.e. home, car etc. are not at risk to the Creditors. All you have to do is to pay an amount according to your disposable incom every month. You usually pay a reasonably reduced percentage of the actual amount owed. Your credit ratings can be blemished during the process, but once it is completed your ratings could improve.

Legal Protection and Obligations

Once you agree with your Creditor for an IVA, the process to follow is legally protected. Your Creditors cannot pursue you for collection outside IVA or continue enforcement actions i.e. force you to go for Bankruptcy.

An IVA offers you help, however, when you agree to certain terms the scope becomes limited to these conditions. When you agree with the Creditor upon certain terms and conditions you have to keep to it up. You must pay the due amount of installment on time or the process of the IVA may fail and the Creditors may take alternative actions against you, such as, Bankruptcy.

Regular reviews

The relationship manager speaks your language and he may even train you for the process of an IVA. Before finalizing the terms and conditions, the relationship manager will review your financial status; your monthly income and monthly basic expenditures and then set up an affordable monthly installment for you. However, this is not a one time process and there are regular reviews. These reviews are necessary to keep track of any changes in your financial situation.

If there is a considerable change in your financial status, the relationship manager will take care of it and if he thinks that an IVA is no longer a suitable option for you, he may suggest you an alternate solution to get rid of your debt that suits your current circumstances. He will also tell you the reasons for adopting the alternate approach.

Continuing Support

If you don’t know the technicalities of a legal process, a constant support and counseling is indispensable. You are not left alone during the whole process of the IVA, from its initiation to its completion an IP will support you. If you have any queries or concerns during this process you may contact your Relationship Manager or IP.

If you apply for an Individual Voluntary Arrangement without knowing its conclusion, the results may be very different from what you expected. Before opting for an IVA you must get well versed with its implications and costs.

We suggest you to seek professional advice and get more information from a certificated advisor.

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