Is An IVA The Right Choice? by Jamie Lyons

An Individual Voluntary Agreement or IVA is an arrangement between an individual and their creditors which guarantees that the individual will make available funds to remunerate creditors. Those who take on an IVA are generally assigned an IVA supervisor, to whom they make monthly payments, which are then distributed to creditors as stipulated in the agreement. This form of agreement is aimed solely at those individuals who are unable to pay back money owed on the terms initially agreed and not available to those who are capable of sustaining their current terms of repayment to creditors.

If you successfully apply for an IVA and it is accepted by the majority of your creditors then the major upside is that the total amount you must repay over the 5 year period of the agreement is lowered so as to be within your means. Ultimately this means an overall reduction in the amount payable to your creditors as a consequence of a freeze on interest and the writing off of some debt. As such, an IVA can be an absolute lifeline for those who find themselves in unmanageable debt: taking the pressure off the situation and providing a means of ‘wiping the slate clean’ over a realistic period of time.

Although an IVA is the best means of regaining control of your finances in some instances, it is not always a preferable or available option. Individual Voluntary Agreements are designed to act as an alternative to bankruptcy and only come into force if the majority of your creditors vote in favour of the agreement. If an IVA is accepted, the individual to whom it applies is not ‘let off’ their debt, they are required to make monthly payments and may well find themselves with limited spare funds as a consequence. Furthermore, the IVA is predominantly aimed at the settling of non-priority debts- such as unsecured loans and credit cards: it cannot help directly with priority debts such as bill arrears or mortgages although it will go some way to help as the payment plan is arranged around these priority outgoings.

As previously stated, an IVA is only applicable if your debts are deemed ‘unmanageable’: i.e., you are unable to pay your debts within a reasonable period of time. By the same token, you must also demonstrate to your creditors that you are able to adhere to the payment of a monthly fee for the duration of the agreement.

As an IVA is only available in certain circumstances and is also likely to impact negatively on your credit rating it is worth considering alternative options before applying. If for instance, you believe that you may be able to pay off your debts over a reasonable period of time, a debt management plan (which lowers your monthly outgoings) may be a more sensible alternative. An experienced debt management organisation will be able to advise you on the best course of action and a number will do so entirely free of charge and with no obligation.

Written by Jamie Lyons for DHFS Debt Management Help -experts in IVA Advice

Article Source: http://www.earticlesonline.com/Article/Is-An-IVA-The-Right-Choice-/761546

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