IVAs Are They For You
An IVA can aid anyone who is beset by problems clearing their debt. It is an particularly appealing option to homeowners who would risk losing their house if they were made bankrupt.
An IVA could help if;
Your lenders have already refused to accept an informal debt management agreement
You formerly had an informal arrangement, but you could not keep up with its terms.
You have 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 formerly had an informal arrangement, but you could not meetits terms.
Your creditors have already refused to accept an informal debt management arrangement
You you are in danger of being made bankrupt, or you are currently bankrupt and you want to alter that situation.
You have so many creditors that an informal IVA arrangement would not be practical.
You may have a small company which you would be unable to keep running if you became bankrupt. You would be made redundant 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 lenders. You want a formal arrangement with your creditors to receive that lump sum and write off the balance of what you owe.
You have equity in your house. You wont 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 ask for as much of the equity in your home as they can get. With an IVA you are less limited restricted as with bankruptcy. EG, with an IVA you are not obliged to tell your building society. Therefore, you can still be able to use your bank account.
And the disadvantages?
If you are unable to keep to the terms of your IVA, then the Insolvency Practitioner who is supervising your Individual Voluntary Agreement (IVA) or your creditors, can petition for your bankruptcy.
If three quarters of your lenders do not agree to your proposed IVA or Individual Voluntary Agreement you are subsequently back to square one. It will be twelve months before you can make another IVA proposal. You should carefully consider your paperwork.
If you are a mortgagee, it could be that under the terms of the Individual Voluntary Agreement you have to sell your house. An alternate approach is to include a clause in your IVA where you have your house appraised after an prearranged amount of time with the aim of releasing the “equity” in your house 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 changes and you are unable to afford the repayments, unless your Insolvency Practitioner can persuadeyour lenders to accept a revised agreement, your IVA will end. This will mean you are facing bankruptcy.
This entry was posted on Wednesday, September 30th, 2009 at 3:43 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.