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IVAs
At Money Tailor we aim to straighten out your debts and neaten up your finances by finding you an option that best fits your individual requirements.
Let‘s have a look at an option you may not yet be fully familiar with. The IVA.
What are they?
An IVA (Individual Voluntary Arrangement) is a legal agreement between you and your creditors. IVAs were introduced under the Insolvency Act 1986. An IVA, provided you stick to it, protects you against any further action from your creditors. Once you've committed to an IVA, you could become free of debt after 60 months.
Other advantages of an IVA include:
- One reduced monthly payment
- Prevents any further legal action by your creditors
- Interest and charges are stopped
- You can use a current account, minus the overdraft facility
- An IVA is not made known to your employer or landlord
- Your professional status is not jeopardised
- Your business is unaffected
How long will an IVA last?
Typically for 5 years, or 60 months after which any remaining debt is then written off.
What's the catch?
There isn’t one: Just some things to be aware of when weighing up an IVA, since they don’t suit everyone.
Remember, there is a minimum threshold requirement.
An IVA can only cover your unsecured debts. Debts secured against an asset you own, such as a mortgage, secured loan or car finance cannot be part of the IVA.
Should the IVA fail you could face bankruptcy and have the costs of the IVA added to your debts (although it won’t fail if you make repayments); also all IVA’s are recorded in the public register and will affect your credit rating for upto 6 years after completion.
Homeowners may be required to re-mortgage in the 5th year of the IVA and release a portion of any available equity as part of their overall contribution to their creditors.
There are costs involved in arranging an IVA. These vary from case to case but are included in the monthly payments you make into the IVA. You will be informed separately of the proposed fees by the Insolvency Practitioner before you have to commit to the IVA.
What do I have to do?
An IVA proposal is drawn up by a Licensed Insolvency Practitioner who will ask you a number of questions pertaining to your financial affairs. This provides the basis for the IVA - the “reasonable amount.” A meeting is then arranged with your creditors who vote on whether to accept the proposal. This is decided by the creditors who are owed at least 75% of the outstanding debt and in only a very few cases are these proposals refused.