If you are in debt and looking for a way out, you may have heard of an IVA. An IVA is short for an individual voluntary arrangement, which is a formal agreement you make with your creditors. It is essentially a contract to which both you and your creditors agree to pay off your debts over a specified period of time with a specified payment.
If you are considering filing for bankruptcy, but you still have a regular income, this could be a good alternative. Typically, with an IVA, you can get the creditor to agree to write off a portion of the debt in exchange for making regular payments to the remaining amount of debt.
How an IVA Works
First, you must find out if you qualify for an IVA. To see if you qualify, a licensed practitioner must go over your finances to see if you are eligible. If you are, they will nominate you for the IVA (this is simply accepting the fact that you qualify for it).
You then draw up your proposal for your IVA. This is your proposal to put forward the best offer of repayment you can afford. This could include lump sum one-time payments, regular contributions over a period of time, or some combination of the two.
Once you draw up your proposal, it will be sent to each of your creditors. Your creditors then have to vote to accept or reject the proposal. If it is accepted by at least 75% of your creditors by value of your debt, it will be legally binding for all your creditors.
Once your IVA is approved, you simply start following the terms of the proposal – making the required payments. At this point, all calls and letters from your creditors must stop, and creditors must follow the agreement.
After all terms of the IVA have been met, the remainder of your debts will be cleared.
This is a guest post on behalf of payplan.