An will aid anyone who is having difficulties repaying their debt. It is an especially persuasive offer to family’s who are at risk of losing their house if they were made bankrupt.
You could benefit from an IVA if;
Your lenders have declined an informal debt management agreement
You formerly had an informal arrangement, but you could not keep up with its terms.
You are in debt to so many creditors that an informal debt management arrangement would not be practical. You you are in danger of being made bankrupt, alternatively you are currently bankrupt and you want to reverse that position. You have already had an informal arrangement, but you could not adhere toits provisions.
Your lenders have not agreed to an informal debt management agreement
You could be made bankrupt, alternatively you are currently bankrupt and you want to reverse that situation.
You have so many creditors that an informal Debt Online agreement would be impractical.
You may have a small business which you would be unable to keep running if you became bankrupt. You would lose your job if you are made bankrupt, jobs such as accountants, solicitors, police man and armed forces. You have a significant amount of disposable capital but it is still not enough to fully repay your creditors. 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 wont necessarily lose your home if, with the agreement of the IP and your creditors, it can be kept out of the Individual Voluntary Agreement (IVA). However, your creditors will normally ask for the maximum amount of the equity in your home as they can get. With an IVA you are less limited restricted than with bankruptcy. For example, with an Individual Voluntary Agreement (IVA) you are not obligated to notify your bank. So you can still be able to use your bank account.
And the disadvantages?
If you are unable to comply 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 creditors fail to agree to your proposed Individual Voluntary Agreement (IVA) you are subsequently back to square one. It will be twelve months before you can make another IVA proposal. You need to get it right.
If you are a homeowner, it could be that under the terms of the IVA you have to sell your house. An alternative method is to include a clause in your IVA whereby you have your house appraised after an agreed time frame with the aim of releasing the “equity” in your house at that time, to your creditors. Your lenders 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 convinceyour creditors to accept a revised agreement, your IVA will terminate. This could mean you are facing bankruptcy.
