What is an IVA?
If you want to take a new loan and have a poor credit history, an IVA could be the solution. Although IVAs can be risky, they can help you rebuild your credit and get the loan you need. It can be difficult to find a bank that will offer you a good rate of interest if you have bad credit. Therefore, it is vital to get advice before taking out a new loan. Otherwise, you may end up being bankrupt and losing your home.
In order for an Individual Voluntary Arrangement to be approved, your creditors must accept your proposal. This means that 75% of your creditors (by value) need to accept it. If not, the creditors owed the most can vote against it. This means you will likely have to haggle with your creditors to get the terms you want. For example, they may want you to pay more every month, include assets, or make payments over a longer period.
While you can still operate your business while you’re in an IVA, you may be asked to release some of your equity. However, this doesn’t mean you have to sell your home. It’s important to remember that your IP will check to make sure that you have enough equity to repay your debts in full. In some cases, your IP will ask you to remortgage your property in order to release some equity from it.
While an IVA can be a very attractive proposition for those with financial problems, it is vital to understand all the risks involved. Before deciding to enter into a legally-binding agreement with your creditors, it’s best to talk to a debt charity. These organizations can provide you with valuable money advice and information about repaying your debts.
In the UK, an Individual Voluntary Arrangement (IVA) is a legal agreement between you and your creditors that allows you to consolidate multiple debt payments. The arrangement also protects your assets from any legal action. Typically, an IVA lasts for five years, after which your debts will be written off as paid in full.
Once you’ve been enrolled in an IVA, your details and your plan will be published on the Individual Insolvency Register. This information is published for three months following the completion of the IVA and for six years afterwards. You will have to notify your Insolvency Practitioner of any changes to your financial circumstances if you wish to continue.