The IVAs are simple regal procedures that are designed to help individuals with unsecure debts. In other words, an IVA is a form of bankruptcy. This simply means that, if any person needs to apply for an IVA, his/her unsecured debts are required to be higher in value than the total value of any other asset that the person in question owns. This may include any property, such as a vehicle or even a home. An IVA is a regally binding agreement made between an individual and his/her creditor. With an IVA, the creditor in question will agree to accept a certain affordable monthly payment towards settling your debt over a period of time. The period is usually 5 or 6 years. However, in some special cases, some people are able make me lump sum payments towards their debts instead. Others will also pay a combination of monthly payment and a lump sum amount to settle their debts.
1. How Can A Person Apply For Individual Voluntary Arrangements?
IVA is a legal agreement and such; the person must applying must thus apply an IVA through a licensed insolvency practitioner (IP). Therefore, the primary step for the person is to find an IP individual who is willing to act as a nominee of the legal arrangement. However, the role of the IP will change during the progress of the case. At the first stage, before the person in search for an IVA has committed him/herself, the IP is just a professional adviser. He thus helps the person in question in making the right decision about what he/she is doing. If the person decides to go ahead with the IVA application process, he will thus assist the person in putting down hi/her proposals in his/her creditors.
Once the person has completely decided to go ahead with the IVA, the IP will thus become his nominee. The nominee will tell the court about this proposal. If he thinks that the proposals are not right to put the creditors' meeting, he must thus tell the court. The court may then end the IVA at that very stage. On the other hand, If it appears to the court and the IP that the proposals in question are acceptable, a creditors' meeting will thus be held in order to give the creditors a chance to vote on whether or not to accept these proposals. If the 75% in value of the creditors who are represented at that meeting vote in favor of these proposals, the IVA will thus be implemented.
2. IVA Pros
IVA is legally binding. The IVA is regally binding on a person's creditors. Due to this fact, a person's creditors can no longer take any further legal actions against him. Moreover, the creditors can no longer contact the person either by post or by phone at any given time. If approved, the creditors must therefore abide by the rules and regulations abide by the IVA. This will include writing off the percentage of the person's debt.
You can't be forced to sell your own home. In an IVA, a person would not be forced to sell his/her home but rather be expected to attempt to re-mortgage his/her properties six months before the end of the IVA. The mortgage would usually be at 85% loan to value and also subject to strict affordability criteria.
You are Able to keep some assets. In an IVA, it is actually very possible for the person in question to retain some of hi/her assets such as vehicles and many others. The extra IVA payments can also be offered in place of retaining other assets and the person's creditors will decide if they will agree to this.
3. Disadvantages of IVA
Just like any other debt solution, there are few disadvantages that come with the IVA. One of the main disadvantages is that, a person's credit rating will be affected for six good years after it starts. Obtaining further credit becomes more difficult during that very time. A person may find even more difficult to get a mortgage or rather find the rates available to him/her are too higher. If the person in question is a home owner, he/she may thus be required to release some of the equity in his/her home towards the very end of the agreement. If the person is unable to remortgage, his/her IVA could in turn be extended by up to a full year.