The Possibilities Of An IVA
An might help anyone who is experiencing problems paying back their debt. It is an particularly appealing option to homeowners who are at risk of losing their home if they were made bankrupt.
An IVA can help you if;
Your lenders have already refused to accept an informal debt management agreement
You previously had an informal arrangement, but you could not adhere to its terms.
You are in debt to so many creditors that an informal debt management arrangement would be impractical. You could be made bankrupt, or you have already become bankrupt and you want to reverse that position. You previously had an informal arrangement, but you could not keep up withits terms.
Your lenders have not agreed to an informal debt management agreement
You you are in peril of being made bankrupt, or you have already become bankrupt and you want to reverse that situation.
You are in debt to so many creditors that an informal Debt Advice arrangement would not be practical.
You may have a small business which you could not keep running if you became bankrupt. You would lose your job if you became bankrupt, jobs such as solicitor, accountant, the armed forces, police. You have access to a significant amount of money but it is still not enough to fully repay your debts. You want a formal arrangement with your lenders to accept that lump sum and write off the balance of what you owe.
You have equity in your house. You will not necessarily lose your home if, with the agreement of the IP and your creditors, it can be kept out of the IVA or Individual Voluntary Agreement. However, your creditors will usually want as much of the equity in your home as they can acquire. With an IVA you are less hampered restricted as with bankruptcy. For example, with an IVA you are not obligated to tell your building society. Therefore, you can still be able to use your bank account.
The Disadvantages of an IVA
If you are unable to keep to the conditions of your IVA, then the Insolvency Practitioner who is supervising your Individual Voluntary Agreement or your lenders, can ask for your bankruptcy.
If three quarters of your lenders do not acquiesce to your proposed IVA or Individual Voluntary Agreement you are effectively back to square one. It will be 12 months before you can make another IVA proposal. You should carefully consider your proposal.
If you are a property holder, it could be that under the terms of the Individual Voluntary Agreement (IVA) you have to sell your house. An alternate approach is to include a clause in your IVA where you get your home appraised after an prearranged number of years with the aim of releasing the “equity” in your property at that time, to your creditors. Your creditors may agree to you paying monthly IVA instalments for an additional year to cover the amount of equity in your home.
If your financial position alters and you can’t afford the repayments, unless your Insolvency Practitioner can coerceyour lenders to agree to a revised agreement, your IVA will terminate. This could mean you are facing bankruptcy.
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