The IVA can be a good solution for people that are facing bad debt, debt collectors, bailiffs knocking the door or facing the loss of their home or car. It can also be a disaster in some cases as well.
An IVA or Individual Voluntary Arrangement (Some call it incorrectly, Individual Voluntary Agreement) is a binding debt repayment agreement that is put in place by an Insolvency Practitioner between you and your creditors.
The IVA solution is best used to show how creditors they can agree to this repayment offer and they will recover more than if you are made bankrupt. But logic and commonsense don’t always work with creditors and some creditors would rather see you go bankrupt and get off their books than deal with small payments from you for years and years.
An IVA to Avoid Bankruptcy
An IVA can be a reasonable way to avoid going bankrupt, petitioning for bankruptcy of being made bankrupt by your creditors. By entering into an IVA with your creditors you are able to create a binding debt repayment plan that when completed will eliminate your debt for less than you owe now and without interest charges.
But if you fail to make your IVA payments through the plan and it fails, it can be like throwing money into a fast flowing creek, never to see your pounds and pence again. The reason is that an IVA is successful only if you make all the payments you agree to under the IVA. If you fail to meet your obligation then the IVA will fail, you could be made bankrupt and the creditor can go back after the entire amount you owed, plus interest.
In some regards and IVA is like a magic cure for problem debt. For many it works well, and for some they run into an unforeseen situation and the IVA never completes to the point where the debt is eliminated.
IVA Benefits
But despite those negative consequences and realities about an IVA, IVAs are often able to put in place that do successful eliminate the debt, without you going bankrupt.
The Best Way to Know if an IVA is Right for You
At the very least, it makes good sense for you to ask for a professional opinion if an IVA is right for you. At least that way you will know, with some certainty if an IVA is a good solution for your problem debt.
Tags: avoid bankruptcy, iva, repay debt
