Incurring a lot of debts can be a nightmare leading to liquidation and loss of assets such as houses and vehicles. As such, the United Kingdom has set up the Individual Voluntary Arrangement (IVA) which sets up an agreement between debtors and creditors to pay all or part of the debts incurred. This agreement helps debtors avoid losing assets and ending up bankrupt.
According to an Individual Voluntary Arrangement, the debtor agrees to make regular payments to an insolvency practitioner who divides the money between the creditors. IVAs tend to give debtors control over their assets, unlike bankruptcy, which ends in the loss of all assets. The insolvency practitioner figures out the amount that the debtor can afford to repay and the duration of the IVA policy. To calculate the repayment amount, the practitioner needs to acquire details of the debtor's financial situation such as assets, debts, income and creditors. After that, the insolvency practitioner contacts the creditors and holds a meeting. The agreement is born after gaining 75% of the votes. The Individual Voluntary Arrangement applies to all the creditors, even those that may disagree to it. The IVA also prevents the creditors from contacting or taking action against the debtors.
Individual Voluntary Arrangement requires two fees that are the setup fee and a handling fee for every payment. The insolvency practitioner can cancel the IVA if the debtor doesn't keep up the timely repayments. The debtor's IVA is added to the Individual Insolvency Register and is removed three months after the IVAs term ends. To obtain more information kindly look at Orange
Generally, all unsecured debts are eligible for an IVA, debts such as credits cards, payday loans, overdraft with current or previous bank accounts, unsecured loans, HMRC debts, council tax debts, etc. are some examples. IVAs can help a debtor get his life back and create a better future, but it is advisable to consult a professional solvency practitioner before starting one.