IVA UK - Information and Advice On How To Make Sure You Find The Right IVA Company

                                                                                         

An IVA is a debt solution which is only available in the UK. It stands for an Individual Voluntary Arrangement and is a formal agreement between you and your creditors, which is negotiated by an Insolvency Practitioner. The basis of the agreement is that you make payments of an agreed amount over a specified period of time (usually five years) after which your debts are considered to be fully settled. This usually involves writing off a significant portion of the debt.

From the date of the IVA, the amount of your debt is usually frozen and you should not be charged any further interest or penalty charges. It is often seen as a better option than bankruptcy for people who are faced with the need to get rid of debts which they can’t afford to repay. Even though an IVA lasts longer then bankruptcy, it does not have the stigma or some of the legal consequences that bankruptcy brings with it.

For example, you can carry on using your bank account without declaring that you have an IVA, and there are no jobs that you will be prohibited from working in, as there are for anyone who has been made bankrupt. Also, your house may be excluded from the IVA if the Insolvency Practitioner agrees, so the risk of losing your home is less with an IVA.

An important point about an IVA is that, unlike a Debt Management Plan, which is a completely informal arrangement, the IVA is legally binding. If at least 75% of your creditors agree to the IVA, then the remaining ones are bound to it whether they like it or not. The 75% agreement relates to the proportion of the debt in monetary terms, not the number or creditors. So if 75% of your total debt was owed to two companies, you would only need the agreement of those two companies for the IVA to also bind the other people who are owed money. So if you have already looked at a Debt Management Plan or other informal agreement, and some of your creditors will not agree to it, an IVA could be a better alternative.

IVAs do of course cost money, because the companies who negotiate and administer the schemes need to be paid for their work. Generally you do not need to find this money up front and it will be included as a proportion of the monthly repayment amount that you agree. The cost is still less than the cost for declaring bankruptcy, and provided a good proportion of your debt is written off, it can seem like money well spent.

Care should be taken when selecting an IVA company, however, as rates can vary enormously. You must also bear in mind that when discussing the options for dealing with your debts, these companies stand to gain financially from the decision you make. You should therefore take care to select a reputable company in the first place, who will properly consider your particular situation, offer you advice then allow you to choose the best option, rather than pressurise you to go for the scheme that will generate the biggest income for them.

About the author:
Read more information on IVAs, including recommendations for the top IVA UK Companies. K D Garrow has worked as a senior manager with significant financial responsibility for the last twenty years. His Debt Cures website offers free, unbiased advice on a range of debt related issues, including payday loans, debt consolidation loans, bankruptcy and debt management plans.

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