A Guide To How Individual Voluntary Agreements Work
It is becoming more of a struggle for people to pay off their debts with the state of todays market. A majority of people have more then just credit card debts this can cause individuals a lot of stress especially when they are struggling to make the monthly payments. Even paying off the minimum amount due on a credit card can take years to pay off
People are unaware of options that are available to them. One of these options is an IVA which means an Individual Voluntary Agreement it is a legal binding agreement between the creditor and the borrower. While supervised by a licence insolvency consultant The borrower has to repay a portion of the debt owed.
Although the concepts of an IVA and a consolidation loan are alike the loans are very different. For an IVA all the interest rates and late charges are frozen and all payments are reduced dramatically so as the individual is able to afford it. This means that the creditor can not hassle or chase the individual for payments.
When looking into an IVA there are a few things people need to be aware of, it can be available to anyone who has unsecured debts of £15,000 minimum. The term the debt is normally paid over is between 3 and 5 years. After that period the rest of the debt is written off.
Paying back an IVA is worked out purely on the individuals earnings and what bills have to be paid monthly. Not everyone is entitled to an IVA for instance if the individual does not have a job or after bills there is no money left to play with they will not be entitled to an IVA.
An IVA is different to bankruptcy. Bankruptcy is purely for people who cannot afford to pay off their debts and should only be used as a last resort. A Bankruptcy order can be applied for by the individuals creditor, however it is possible for one to apply for their own bankruptcy order. With an IVA you have more say on how one's assets are dealt with, obviously doing this in a responsible and satisfactory way with the creditors. It is also possible to keep one's bank account or one can still run a business which cannot be done if individuals opt for Bankruptcy.
Final comments
When the period of the IVA has finished and all the requirements have been adequately met and the debts have been cleared 70% of your debts could be removed.
