What does IVA stand for?

IVA is an acronym used for Individual Voluntary Arrangement. It is referred to as a formal debt solution particularly designed for an indebted person to deal tactfully with unaffordable loans and unsecured debt.

An IVA is a mechanism that restructures the outstanding repayments to an entirely novel monthly payment scheme that assists the debtor in keeping himself abreast with the expenses on priority basis. These may include secured loans, such as mortgage payment, and basic living expenditure, without having the need to worry about any legal recovery action that could otherwise be taken against them for being defaulters.

Being a formal debt arrangement that it is, the IVA has been established with a view to protecting both debtors and creditors from making any adjustments to the arrangements, once it has been agreed upon by the two parties.

There is no harassment by unsecured creditors to the debtors, as the former cannot contact the debtor directly under the IVA terms, and that all communications can only take place through an Insolvency Practitioner chosen by the debtor, who is responsible for administering the IVA in its entirety.

Basically, an IVA is set for a term of 5 years, after the completion of which, the debtor becomes free from the debt, even if he has not been able to make the full repayment of the debt amount.

An IVA is a suitable option especially when a debtor has a property to be protected from a creditor, since IVA does not allow the unsecured creditors to force the sale of the property and instead the maximum equity needs to be settled upon, which could be released by way of a standard re-mortgage.

Highlights:

An IVA is a legal binding agreement where the debtor agrees with his creditors to make affordable payments towards the total amount of the debt own during 5 years time.

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