IVA debt solution helps avoid bankruptcy

IVA

Bright Oak can guide you to an IVA. Contact us to find out if you qualify.

Introduction

IVA’s (Individual Voluntary Arrangements), are an increasingly popular way for those with financial difficulties to solve their debt worries.

IVA’s were created by Government legislation to enable many people with significant debt problems to avoid bankruptcy. It’s generally considered that an IVA does not carry the same stigma as bankruptcy. For example it will not be advertised in the newspaper and most people would not need to notify their employer that they had entered into an IVA.

Another key benefit of an IVA is that in the vast majority of cases homeowners will keep their own home. This is often not the case with bankruptcy.

Who can enter into an IVA?

Typically you would owe over £15000 in unsecured debts. Unsecured debts include debts like credit cards, personal loans (if not secured on your home), overdrafts, store cards, catalogue bills etc.

Your personal financial circumstances would be recorded. If after paying for all of your essential expenditure each month (mortgage/rent, utility bills, food, travel etc) it is clear that you do not have enough money left over to be able to pay your debts then an IVA might be for you.

How does an IVA work?

An IVA is a formal arrangement between your unsecured IVA creditors and yourself. You agree to pay what you can reasonably afford towards the debts you owe. This agreement is usually for 60 months. In return your creditors agree to write-off the amount still outstanding at the end of the IVA. Interest and other charges are frozen.

The arrangement process is handled by an Insolvency Practitioner. They work with you to put together your proposal to your creditors. After they send the IVA proposal to your creditors, they will deal with the responses received. Your creditors may accept your proposal, reject it, or propose modifications. The IP will discuss any proposed modifications with you so that you may decide whether to accept them or not. An example of a potential modification might be if a creditor believes you have allowed too much or too little to cover your household expenses.

An IVA vote is held. If 75% of your IVA creditors accept your IVA proposal, then all of your creditors will be bound by it. It becomes a formal binding legal arrangement between your creditors and yourself, and will now be supervised by the Insolvency Practitioner.

Assets

If you own your home it may be necessary to contribute ‘equity’ held in the home to the IVA. In practice this generally means a remortgage to release the equity. This might be at the start, during, or at the end of an IVA.

Where a significant equity contribution is made to the IVA it is possible that the arrangement might last only 12 months rather than 60 months.

Any other assets you hold may be discussed with the Insolvency Practitioner.

Fees and Costs

The agreed monthly contributions to the IVA (and any one-off payments such as a remortgage) fund the Insolvency Practitioner’s fees. The individual entering the IVA will not be required to fund any fees directly by any other means.

Summary of IVA Advantages

Creditor pressure is removed.
You agree to the proposal made to your creditors, leaving you in control.
Your regular living expenses are taken into account, ensuring your personal and family needs are covered.
Homeowners can almost always keep their home.
Avoids the stigma of bankruptcy.
Most people need not inform their employer.
All interest and charges are stopped.
The Insolvency Practitioner will deal with creditor letters and calls.
Stick to the agreement and you will be debt free at the end of the IVA.

Some Potential Disadvantages

Homeowners may need to release equity.
Failing to stick to the IVA agreement might result in bankruptcy.
You will be unable to borrow money during the IVA without the IP’s permission.
An IVA will affect your credit record.

IVA right for you? IVA information from Bright Oak provides the IVA knowledge that you can use to decide.



	IVA Bright Oak can guide you to an IVA. Contact us to find out if you qualify. Introduction IVA’s (Individual Voluntary Arrangements), are an increasingly popular way for those with financial difficulties to solve their debt worries. IVA’s were created by Government legislation to enable many people with significant debt problems to avoid bankruptcy. It’s generally considered that an IVA does not carry the same stigma as bankruptcy. For example it will not be advertised in the newspaper and most people would not need to notify their employer that they had entered into an IVA. Another key benefit of an IVA is that in the vast majority of cases homeowners will keep their own home. This is often not the case with bankruptcy. Who can enter into an IVA? Typically you would owe over £15000 in unsecured debts. Unsecured debts include debts like credit cards, personal loans (if not secured on your home), overdrafts, store cards, catalogue bills etc. Your personal financial circumstances would be recorded. If after paying for all of your essential expenditure each month (mortgage/rent, utility bills, food, travel etc) it is clear that you do not have enough money left over to be able to pay your debts then an IVA might be for you. How does an IVA work? An IVA is a formal arrangement between your unsecured IVA creditors and yourself. You agree to pay what you can reasonably afford towards the debts you owe. This agreement is usually for 60 months. In return your creditors agree to write-off the amount still outstanding at the end of the IVA. Interest and other charges are frozen. The arrangement process is handled by an Insolvency Practitioner. They work with you to put together your proposal to your creditors. After they send the IVA proposal to your creditors, they will deal with the responses received. Your creditors may accept your proposal, reject it, or propose modifications. The IP will discuss any proposed modifications with you so that you may decide whether to accept them or not. An example of a potential modification might be if a creditor believes you have allowed too much or too little to cover your household expenses. An IVA vote is held. If 75% of your IVA creditors accept your IVA proposal, then all of your creditors will be bound by it. It becomes a formal binding legal arrangement between your creditors and yourself, and will now be supervised by the Insolvency Practitioner. Assets If you own your home it may be necessary to contribute ‘equity’ held in the home to the IVA. In practice this generally means a remortgage to release the equity. This might be at the start, during, or at the end of an IVA. Where a significant equity contribution is made to the IVA it is possible that the arrangement might last only 12 months rather than 60 months. Any other assets you hold may be discussed with the Insolvency Practitioner. Fees and Costs The agreed monthly contributions to the IVA (and any one-off payments such as a remortgage) fund the Insolvency Practitioner’s fees. The individual entering the IVA will not be required to fund any fees directly by any other means. Summary of IVA Advantages Creditor pressure is removed. You agree to the proposal made to your creditors, leaving you in control. Your regular living expenses are taken into account, ensuring your personal and family needs are covered. Homeowners can almost always keep their home. Avoids the stigma of bankruptcy. Most people need not inform their employer. All interest and charges are stopped. The Insolvency Practitioner will deal with creditor letters and calls. Stick to the agreement and you will be debt free at the end of the IVA. Some Potential Disadvantages Homeowners may need to release equity. Failing to stick to the IVA agreement might result in bankruptcy. You will be unable to borrow money during the IVA without the IP’s permission. An IVA will affect your credit record. Contact us to find out if you qualify for an IVA. IVA right for you? IVA information from Bright Oak provides the IVA knowledge that you can use to decide.


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