What Is an IVA?
An Individual Voluntary Arrangement, or IVA to give it its more commonly known name, is a method of solving debt problems which has become more and more popular over recent years.
It is a legal process carried out by a licensed insolvency practitioner, which will reduce your monthly repayments and in time clear your debts completely, while avoiding the financially disastrous effects of a bankruptcy.
Although an IVA is still a very serious business and shouldn't be entered into without full consideration of the effects, this avoidance of bankruptcy is what has made it so popular among those suffering under severe debt problems.
How Does an IVA Work?
The first step is to draw up a detailed Statement of Affairs which accurately describes your current financial situation, listing your income, outgoings, assets, and debts. Armed with this, you can then make a reasonable proposal on how you can service at least some of your debt without being forced into bankruptcy by court orders.
These proposals and the Statement of Affairs are submitted to the court, which will then put a temporary injuntion on any further debt collection action until the IVA application has been considered.
Meeting of Creditors
In the next stage, your creditors have the option of attending a meeting to discuss whether the IVA is acceptable. If 75% of those who attend the meeting agree that the proposals are acceptable, then the repayment arrangements made in them become legally binding. This means that should you keep to the proposals you made, then no creditor will be able to take further action against you.
After a period of 3 to 5 years, any remaining debt will be written off, leaving you debt free.
© 2008 Debt Sorter
