The IVA or the Individual Voluntary Agreement is a legal agreement present between a person (or an organization) and the creditor whom they pay back their debts. This is totally a legal process, approved by the court, where the creditors must strictly rules and regulations.
The IVA is quite flexible according to the needs of the debtor. But, they are quite expensive and there are some risks involved.
Basically, with the help of IVA advice, one can get appropriate solutions for paying back their debts within the given time limit. After the end of the limited time period, the debts that are left are withdrawn. There is also an interesting feature which is known as the Lump-sum IVA.
Thus, before applying for the IVA, you must understand the benefits as well as the risk. After going through these, proceed by applying for the IVA.
What are the Different Benefits of IVA Debt Advice?
The benefits that the IVA provider, are listed below. Check them to understand if you are eligible for it or not:
- With the help of IVA, one can easily make the monthly payments for the debts, for five to six years.
- As long as one makes the payment for maintaining the mortgages or loans against their property, they can securely keep their property intact.
- For the IVA Agreement, no fees for setting up is necessary.
- Some amount of fees is necessary to be paid while the IVA is in progress. This fee includes the amount for the monthly repayments and the creditors usually set this amount.
- If there is any kind of lump-sum offer, one can pay the amount as the “full and final settlement”. One can also pay the lump-sum amount on a monthly basis as well.
- After the final payment is done and IVA wires off the unsecured debts, creditors can pursue the payments.
Different Risks associated with IVA
As IVA provides benefits, it also consists of risks that may cause greater issues with the payments of debts. The risks of IVA is listed below:
- If by chance there is equity in the house of the debtor, they have to keep on trying for the re-mortgage. That would lead then to a huge rate of interest.
- By chance, if the debtor cannot re-mortgage, they have to pay the amount for an extra 12 months. Otherwise, different third-parties offer the sum equivalent to the equity.
- With the failing of IVA, a creditor can request the IVA supervisor for the Bankruptcy petitions.
- It affects the ratings for the credit in a negative manner.
- Creditors often do not approve the IVA request of a debtor.
- After the IVA ends, the unsecured debts are only which are written off.
- The public registers keep the records of the IVA.
- Until the IVA totally completes, all the spendings of the debtor are restricted.
If you are planning to apply for the IVA then we can help you get a complete solution for that. But before that let us see how the IVA advice works?
Working Process of the IVA
An Insolvency Practitioner is the one who has the qualities for setting up the IVA. A lawyer or an accountant is one that usually sets up the IVA. They generally charge the debtor.
The charges usually depend on the money that one pays back with the help of IVA. Most of the time the charges are quite high. These insolvency partners are the ones who deal with the creditors along the IVA period.
Before going to a debt management company for the IVA Debt advice, check the amount that they will charge you. After that decide what you want to perceive. These organizations charge a lot because they additionally include charges apart from the fess of the Insolvency Practitioners. Else you can go to any individual Insolvency Practitioner to apply for the IVA.
Repayment with IVA: How does it Work?
After you apply for the IVA debt advice the Insolvency Practitioner helps you with a repayment plan for paying all your debt. They make this plan according to the limited period for paying the debts. The amount can be on a monthly basis, or a lump-sum amount. In some cases, there are combinations of both.
The repayment of the debts depends on the monthly income of the debtor and how much they can afford to pay. The creditors have to agree with that amount. The IVA usually ends after 5 or 6 years if the debtor pays the debts on a monthly basis.
If there is any kind of repayment, then the insolvency partner is the one that gets paid. Then, they distribute that amount of money within the creditors. Sometimes, they keep the money as their fees.
At the end of completion of IVA, if the payments done by the debtor are not enough, then paying the pending the amount that is left is not necessary. The debtor will get appropriate advice from their Insolvency Practitioner about this.
Next, we will discuss whether IVA is appropriate for you or not?
Is IVA Advice Appropriate for You or Not?
There are certain aspects that will help you to notice whether the IVA is appropriate for you or not. They will help you to know whether you should apply for IVA or not. So, go through the list:
- The amount for the debt is not so high. If you owe a low amount, but the monthly debts are so high, then you can apply for the IVA. That will help you with paying lower debt amounts on a monthly basis.
- If you have more than one creditor, whom you pay debts then apply for the IVA Advice.
- Apply for IVA to avoid direct contact with your debtor.
- Check if you can pay the necessary amount of the IVA every month. If not, then do not apply for IVA.
Apart from all these, if you cannot meet the criteria given above, you can also apply for the IVA. Depending upon the amount and time period of the debt, you must apply for the IVA.
IVA includes paying a certain amount of money to the creditors, every month for consecutive 5 to 6 years. If someone has not got any fixed income, he or she must not apply for the IVA.
There are certain aspects depending on which one should not apply for IVA, such as:
- If someone works for the accountancy department of an organization or any law or financial services. In that case, they must check the company’s policy whether they can keep the job or not, which makes them eligible to apply for IVA.
- A low amount of debts does not require IVA Debt Advice.
- If one does not have any extra income or a lump sum amount of money for paying the creditor, then they must not apply for IVA.
These are the different situations depending on which one must apply for IVA. Check if any of the given conditions meet, then do not apply for IVA:
Methods for Enrolling into IVA
The methods for setting up the IVA are quite easy. One can easily apply for IVA and set it up. The first and foremost thing that one requires is choosing a correct Insolvency Practitioner.
If the Insolvency Practitioner agrees to the proposal for the IVA of the debtor, then only they will apply for a proposal on the behalf of the debtor. Generally, debtors choose solicitors or accountants as the Insolvency Practitioner.
Thus, contact a well known Insolvency Practitioner and then proceed with the IVA application. Make sure to check the fees of the practitioner whom you will approach for applying for IVA. It is recommended that you compare the fees of 2 or 3 Insolvency Practitioners. Choose the best option and then move to the next step.
Personally Meet the Insolvency Practitioner
Before setting up the IVA, one must positively meet the Insolvency Practitioner personally. The practitioner provides appropriate information on whether the debtor needs to apply in IVA or not.
If you are visiting the practitioner for the first time or taking over the phone, then make sure you get enough information about the IVA. The information must include all your benefits and risks that you might face.
An Insolvency Practitioner must also provide you with other information as well, apart from IVA. After noting down all the aspects one must apply for IVA or any other debt advice services.
You can also take the help of any debt management company. They will guide you with the complete setup for the IVA. Check the reviews of different debt management organizations and choose the best-suited one.
There are many different debt management services and agencies who provide free IVA Advice. Check the services of that organization and then proceed accordingly. After this, all you need to do is set up the IVA correctly.
Setup For IVA
There are a few specific steps for setting up the IVA. Here, you will find the exact steps:
1. For the Interim Order Apply To the Court
To stop the creditor from taking legal action against the debtor during the period of the IVA, the Insolvency Practitioner must apply to the court for an interim order. Under this order, the debtor will not face any legal action during the period of IVA.
2. Discuss All the Finances and Repayments
The debtor must provide relevant information about all the debts and repayments that are present for setting up the IVA. The Insolvency Practitioner will check the income of the debtor and select the amount for paying the debts, after considering all the expenses.
The Practitioner will set up an accurate plan for you to pay the debts within a period of 5 to 6 years. Under this span of time, one can easily clear all the debts.
3. Making an Appropriate Proposal
The debtor has to write a proposal to both the creditor and to the court for accepting his or her request for the IVA. Insolvency Practitioner usually helps the debtor in writing this proposal.
After the practitioner prepares the report, the debtor must sign the report and submit it to the court and the creditor. The points that the report consists are as follows:
- Details about the income of the debtor, his or her assets, pending debts, and other complete financial statements.
- The terms that are necessary for the IVA. This includes information about the agreement length and the amount of debt that the debtor intends to pay.
4. Approval or Rejection by the Creditor
The IP (Insolvency Practitioner) will call the creditor and check whether they have accepted the application for IVA or not. Generally, the IP and the creditor set up a meeting at the IP’s office.
The debtor must attend the meeting so that they can discuss the financial problems. Often, the meeting is accomplished over a teleconference.
If by chance the creditors do not apply the proposal for IVA, the IP tries to convince the creditor to accept the proposal. After the creditor accepts the proposal, then only the setup process for IVA advice will complete.