IVA, or Individual Voluntary Arrangements, are a popular debt solution for people struggling to pay off their debts. With more and more people opting for IVA over bankruptcy or other debt solutions in recent years, it’s important to understand what IVA actually is and how it can help you get out of debt.
In this guide, we’ll take a closer look at IVA and provide answers to some of the most commonly asked questions about this debt solution.
What Is IVA?
IVA is a legally binding agreement between you and your creditors, which allows you to repay your debts over a set period of time. Under this agreement, you can make a single monthly payment to an Insolvency Practitioner (IP) who then divides this payment among your creditors.
Who Can Apply for IVA?
Anyone with unsecured debts of over £6,000 from at least two creditors can apply for IVA. However, it’s important to note that IVA is not suitable for everyone and your eligibility will depend on factors such as your income, debts, and assets.
What Are the Benefits of IVA?
There are several advantages to choosing IVA over other debt solutions:
– Your debts are frozen, meaning your creditors can’t take any further legal action against you.
– Any interest and charges on your debts are frozen, giving you a chance to clear your debts without accruing additional charges.
– Your monthly payments are based on what you can realistically afford to pay.
– After the set period (usually five years), any remaining debt is written off.
What Are the Risks of IVA?
As with any debt solution, there are some risks associated with IVA:
– If you don’t keep up with your repayments, your IVA can fail, and your creditors can take further legal action against you.
– Your credit score will be affected while you’re in an IVA, and it will remain on your credit file for six years after the IVA ends.
– You may have to release equity from your property to pay off your debts.
How Can You Apply for IVA?
To apply for IVA, you’ll need to find a licensed Insolvency Practitioner who will assess your situation and help you negotiate with your creditors. It’s important to choose a reputable IP to ensure that your IVA is set up correctly and in your best interests.
In conclusion, IVA can be a helpful debt solution for anyone struggling with unsecured debts. However, it’s important to understand the risks and benefits before applying for IVA. By choosing a reliable Insolvency Practitioner, you can ensure that your IVA is designed to meet your specific needs and help you become debt-free.
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