Ways out of debt

One of the ways of dealing with your debt issues is individual voluntary arrangement (IVAs). Here’s a detail of how IVAs work, how they can affect your credit score/rating and how it can help you in getting financial advice.

How do IVAs work?

An individual voluntary arrangement (IVA) is an agreement between you and your creditors for paying all or a part of your debts. IVA’s payments are done via authorized debt specialist known as ‘insolvency practitioner’ (IP). The share of money depends on your agreement in you IVA.

The unsecured debts must be around at least £15,000 but it is based on you creditors. There isn’t any fixed level of minimum or maximum repayments but will of your creditor is necessary. Your IVA finishes as soon as you repay the agreed amount.

Possible Benefits of an IVA

Following are the benefits of an IVA:

  1. Your IP can be helpful for letting you know how much you can afford to repay.
  2. You IP will be contacting all of your creditors to make them agree to you IVA on your behalf.
  3. Your creditors won’t take any action against you like making you bankrupt or taking you to the courts etc.
  4. Interests and other charges are stopped usually.
  5. By the time you IVA is being set up, rour IP can get you an issue from the court for preventing the creditors to take any of the legal actions against you.
  1. You can get free help and advice regarding debt.
  2. You will also get free advice related to IVAs and also it’s a best option for dealing with your debt issues.

The costs of an IVA

The IP will be charging fees for the discussion that he would do with your creditors and for managing you IVAs as a whole.

You need to understand the full fledge costs of your IVAs before opting one. If you find any trouble then you can consult free advice giving organizations about understanding its costs.

How to get an IVA?

Only your IP can set up IVA for you and you need to make it sure and prove them that you can afford it and would make regular payments. Following are the five steps of getting an IVA.

-Step one

You should interact with a free and independent debt advice organization to make it sure that the IVA is appropriate for you.

-Step two

If an IVA is right for you then get an authorized IP to act on your behalf. They will be helping you in preparing your IVA and will be sending them to your creditors.

-Step three

Following details you must provide to your IP so that he can prepare an IVA for you.

  1. Your income and other assets which can be utilizedfor paying your debts
  2. An estimate of your expense – e.g., food bills, utility bills etc.
  3. Estimate of your debts – e.g., how much amount you owe plus any interest or extra charges on that.
  4. Creditors – you need to provide a full list of your creditors, its important because if anyone is missed out he/she can apply to court and your IVA can be cancelled.

-Step four

Your IP will be representing you in the arranged meeting with all of your creditors regarding approval of your IVA. If majority of the creditors have accepted your request/proposal then the IVA will be applicable to all of your creditors.

-Step five

After acceptance of your IVA, your IP will act as your supervisor in matters regarding IVA. This indicates that your IP will manage all of repayments and will be distributing them to the creditors as per the agreement.

Your tasks when an IVA starts

You need to keep your monthly payments proper as per agreement otherwise your creditors can cancel you IVA.  Any further action can also be taken after the cancellation of your IVA this can also take you to court or you can face bankruptcy. Keep your IP aware of your situation even if it get worse e.g. losing your job etc. they may help you in getting lower monthly payments by taking to your creditors,

IVA affects your credit score

Your IVA will be recorded in the Individual Insolvency Register, so it would keep on updating your credit rating and to change your history is something impossible to be done.