bankruptcy advice northern ireland
Iva Proposal – How To Get A Debt Cutting Iva Proposal
An IVA is a system for getting rid of really bad debts for people in the UK. It stands for Individual Voluntary Arrangement and is only available for residents of England Wales and Northern Ireland. Residents of Scotland have a close equivalent called a Protected Trust Deed.
An IVA proposal is really a legal agreement between you and your creditors about payments you will make towards your debts. Unlike a debt management plan (debt consolidation) it does not usually involve repaying everything that you owe. When you set up an IVA proposal you are agreeing to make regular payments towards your debts for the duration of the agreement. An IVA proposal normally lasts for five years and at the end of that period any remaining debts are written off.
The fact that any remaining unpaid debts get written off at the end of the agreement is what makes an IVA the most effective way to deal with debts that you could never afford to repay by normal means. The alternative is usually bankruptcy, and getting an individual voluntary arrangement has a lot of advantages compared to the lasting impact of becoming bankrupt.
Having debts is not in itself enough to guarantee that you will be eligible for an IVA proposal. They were introduced by the government as an alternative to bankruptcy and they are therefore only for dealing with very serious situations. Most people who use an individual voluntary arrangement cannot afford to keep up with the repayments on their debts, and they are often considering bankruptcy or facing the threat of legal action.
There are other fixed conditions relating to eligibility for an IVA proposal. You have to have at least £15,000 worth of unsecured debts to a few different creditors. The term unsecured just means debts where an asset such as your home is not being used as security. Mortgages or other secured loans cannot be included in an IVA proposal. Unsecured debts do include the most common contributors to debt, such as personal loans, credit and store cards, overdrafts, etc.
For an IVA proposal to work, most of your creditors need to agree to it. You do have the advantage that comes with the arrangement being a legally binding one, in that you just need 75% of your creditors to agree in order to get the proposal through. If you have any reluctant creditors and they represent less than 25% of the debt, they have no choice but to join in with the IVA proposal if the remaining creditors all vote in favour.
However, the majority of your creditors are unlikely to agree to setting up the arrangement unless your financial situation is very serious. Why would anyone vote in favour of accepting less money if they think you could afford to pay it all? For this reason you are unlikely to be accepted for an individual voluntary arrangement unless your financial situation is genuinely very bad. You do need to have a source of income that will allow you to keep up with regular payments, but if it looks like you could actually afford to repay your debts in full, your creditors are not likely to vote for an individual voluntary arrangement.
If you wish to look into getting an IVA proposal your starting point is to find a reputable UK debt management company to advise you. There are a huge number of organisations that can set an IVA up for you, but not all will give you sound advice and some will charge you a lot more than others. You should always apply to a few different companies and compare the advice and terms of the IVA proposals that you get back before choosing which to accept. Start with a list of recommended companies that are proven in terms of reputation and success. You can apply to as many as you want without any obligation to accept the IVA proposal offered.
About the Author
You can find a list of recommendations for reputable providers of an IVA proposal on the author’s website, which offers free advice on your debt problems, including information on debt consolidation, debt settlement, Trust Deeds UK, debt management plans, payday loans, bankruptcy, money saving advice and budgeting.
