An Individual Voluntary Arrangement (IVA) is a formal agreement between you and your creditors where you will come to an arrangement with people you owe money to, to make reduced payments towards the total amount of your debt in order to pay off a percentage of what you owe then generally after 5 years your debt is classed as settled.
IVA Pros: - Creditors who vote against your proposal are still bound by it. - Creditors whose lending is unsecured can't take any further action. - Interest is usually frozen as long as you kee pup your payments. - Your insolvency practitioner will help you prepare your proposal, including agreeing the level of your household and personal spending based on guidelines acceptable to creditors. - Many insolvency practitioners will allow you to pay their fees for preparing your proposal monthly, as part of the IVA. - You make only a single payment each month or quarter. Your insolvency practitioner is responsible for administering and distributing your payments. - The terms of an IVA will usually enable you or your spouse or partner or a relative to make arrangements to buy your share of the net worth of your home or to make extra payments, rather than the home having to be sold. This may be done through a remortgage or a loan. (Net worth means its value after any debts secured on it have been paid.) - On completion of the IVA, the balance of what you owe your creditors is written off. - You may be able to continue running any business you have.
IVA Cons: Your IVA is entered on a public register. - The insolvency practitioner may require payment in advance for preparing your proposal and getting your creditors' agreement. - If there is some equity (value) in your home after taking account of the mortgage(s) on it, you will probably have to pay for your share, usually in the fifth year of your IVA, by remortgaging the property. If you can't get a remortgage, you may have to continue making monthly or quarterly payments from your income, for up to another year. - If your circumstances change, and your practitioner can't get creditors to accept amended terms, the IVA is likely to fail. You will then still owe your creditors the full amount of what you owed them at the start, less whatever has been paid to them under your IVA. - If your IVA fails, you may be made bankrupt.
If you're struggling with debt call the Debt Helpline, no matter how bad the situation seems there's plenty of free advice available to help you with your debt solutions.
Almost everyone owes money, bills are a fact of life. But sometimes you may find you're swamped with debts and can't see a way of paying them all, call the Debt Helpline. The worst thing you can do is to ignore the problem it won't just go away.
If you're thinking about taking out cash from your credit card or even a single loan as debt consolidation to pay off all your existing debts, make sure you're not simply taking on more debt. Check that the terms of the loan interest rates and length of the loan. Be very careful about taking out a loan secured on your house as it will put your home at risk get debt advice.
If you know you can't pay all your debts, its important to prioritise your debts and to write to your creditors to see if you can agree on a repayment timetable. Those people who are already struggling with unmanageable debt should seek advice from an insolvency helpline as soon as they can to find out what options are available and how they can get their finances back on track and start fresh.
Many people are struggling with debts at present, and if you're one of them, you should get the right support as soon as possible. Seeking early expert advice combined with determination can avoid closure. Insolvency – also known as bankruptcy – is a complicated topic that is best addressed by a technical specialist rather than standard certified accountants. Accessing timely expert advice is vital. With the right advice, organisations exploring insolvency may not be in danger of mounting liabilities and could have a number of options other than closure available.
If you are experiencing the following, it may be time to seek specialist advice: - Mounting debts - Less cash flow - Rising income gaps - Worries that you cannot keep doing more with less
Accessing the right advice provided at the right time could have a substantial impact on your future. So if you are not sure if insolvency applies to your organisation, please ask now by calling an insolvency helpline.
Please note that bankruptcy has more than financial and legal consequences so it is important to read and understand the following:- - If you are a sole trader then usually your business will be closed and any employees dismissed. - Whilst you are bankrupt or subject to bankruptcy restrictions - If you are in a partnership at the time of your bankruptcy then the partnership will automatically dissolve upon the making of your bankruptcy order - Reputation could discourage former and potential associates. - Bankruptcy offences, which are punishable by imprisonment or fine or both - Previous transactions being reversed or altered. - Bankruptcy restrictions order, which prolong the restrictions of bankruptcy for between 2 and 15 years.
- An income payments order is a consequence that means you will still have to contribute to your bankruptcy debts for a period of 3 years - Bank accounts for bankrupts are difficult to obtain free of charge. Visit the bank accounts page for more information. - At the date of your bankruptcy you will lose control of your assets. - You risk losing assets of value, including your home. Go to the bankruptcy and home page for more information. - The bankruptcy order will remain on your credit report for six years making future borrowing difficult and expensive. When you apply for a mortgage you will usually be asked if you have ever been made bankrupt. - Some professions, licensing bodies, associations and legal acts prohibit individuals who have had a bankruptcy order made against them or currently have a bankruptcy restriction undertaking or bankruptcy restriction order in place.