If you are new to Individual Voluntary Arrangements, you may be confused about several factors such as how these arrangements can help you escape bankruptcy, whether they are different from other non regulated schemes such as debt management programs and whether you will be eligible for using these arrangements to clear your debts.
Individual Voluntary Arrangements are government sponsored schemes that help persons in debt avoid being declared bankrupt by formalizing an agreement with their creditors to make smaller payments over a specified period of time, usually five years. In normal situations, when a person is unable to repay his creditors for a few months, then the creditors could take action to declare the person bankrupt and use the proceeds from his assets to recover their debts. Entering into IVAs protects the debtor’s assets so long as he continues to make the payments as per the agreement.
In order to be eligible to enter into Individual Voluntary Arrangements, a person has to incur debts more than £15,000 and these debts have to be from three different creditors. It will not suffice to have three different debts such as a credit card, housing loans and personal loans from the same creditor. The individual needs to have a regular source of income and must be able to make small monthly payments. These IVA’s save people from having to take out no credit check credit cards or unsecured personal loans UK.
If you are unsure whether Individual Voluntary Arrangements are for you, the first step is to contact a debt consultant adviser to help assess your financial situation and guide you on the best possible solution. If he recommends an IVA, then the next step is to contact an Insolvency Practitioner who can look at your finances, work out the monthly payments that you can afford and draw up an agreement with the terms. Once this is done, you will have to sign the agreement in the presence of a Solicitor or a Commissioner for Oaths. Your proposal is then discussed with your creditors. It is finalized after the insolvency practitioner incorporates any modifications that they may request after consulting you.
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