How Exactly Does An Iva Work?

How Exactly Does An Iva Work?

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The notions and fine points of debt management can appear to be confounding and complicated at possibly the worst time - when somebody in debt is panicking and looking for a way out. With Bankruptcy, Debt Management Plans (DMPs), Debt Relief Orders and Individual Voluntary Arrangements (IVAs) all as potential options, it can be tricky to understand how they all work, the different end results and therefore what is best given someone's specific debt situation.

In this article, we examine just one of them: IVAs. We take a look at the question "how does an IVA work?" and outline the method below:

The first step is for the individual in debt to determine their debt situation and to contact a debt advisor. Based on the details of their particular circumstances (including how much they earn, how much they owe, and so on), a competent debt advisor should be able to recommend whether an IVA is the best course of action, or if another type of debt settlement would potentially be a better option. Typically, an IVA is appropriate for someone who owes more than ?15k to more than one creditor and who has assets they don't want to lose (e.g. their home).

If an IVA is the best option, then the advisor will draft an IVA proposal, which he/she should show to the debtor before giving it to the creditors. The creditors should receive it ahead of the creditors meeting, which will be a chance for them to disagree with any points and/or request for any changes to be made to the proposed IVA. However, if at least 75% of the creditors are happy with the terms of the IVA then the IVA can commence to run its course and will become legally binding.

The monthly amounts paid to creditors will have been set out as part of the proposal procedure, with creditors in agreement over the amount paid back (if they had previously agreed to the IVA's terms). An IVA goes on for sixty months (five years), during which time creditors are not allowed to take any legal action against the person in debt - unless said IVA fails partway through, of course.

When the 60th payment has gone through on the last month, the IVA is considered finished, with any remaining debts written off. This leaves the debtor legally debt-free, however the IVA will still feature on their credit history for a further year.


About the Author:
Not sure if an IVA or another debt consolidation alternative is best based on your specific situation? Our team of advisors at The IVA Service will be able to help. Whether it is IVAs, DMPs or other options, we will be able to advise. More info can be seen on the website: IVA-Service.co.uk



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


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