All About Iva's

Consumers in the United Kingdom appear to be in more debt than ever before and it is a difficult situation that many are struggling to find a solution to or indeed a way out. Many UK consumers are are in debt and this is where an IVA may be the answer to their financial problems.

An IVA, also known as Individual Voluntary Agreement, is an agreement that is legally binding between the lendor and the borrower. The agreement is supervised by an approved party known as a licensed insolvency practitioner (also known as an IP) and they ensure that the client sticks to the terms of their agreement. The IVA will reduce the amount that the client (also known as the debtor) has to pay each month to their creditors meaning that they can see a clear path out of their financial problems.

The debtor will need to provide the IP with their monthly earnings and outgoings so that the IP can work out how much the debtor can afford to pay each month. All of the debtors creditors will usually have to agree to receiving a reduced amount from the debtor but it could be viewed that some return is better than nothing because if the debtor files for bankruptcy then no one will get anything.

The beauty of this agreement is that once it has been signed, it is legally binding meaning that the creditors can not come after you for any more money during the term of the IVA.

There is certain qualifying criteria for people to become eligible for an IVA and they are:

Have unsecured debts a minimum of 15,000
Proof that you are unable to pay back your outstanding debt.The IP will confirm this with you.
IVAs can be taken out over a period of 3-5 years but it can differ from person to person.

One thing people don't understand though is that not everyone will be automatically approved for an IVA. To qualify you would need to be working and you will need to prove that you have sufficient funds each month to cover all of your living expenses. An IVA really is the last resort and the last step before bankruptcy so it can be a really viable option for people with severe debts but remember this as well: An IVA will affect your credit rating and it may be difficult to obtain credit thereafter.

About the Author:
Paula Harrison is the owner of a UK IVA Company that specialises in free advice. You can find out more by visiting http://www.ivacompany.org.

Article Originally Published On: http://www.articlesnatch.com

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