Debt is usually in the form of credit and being in debt is more common than you’d think. A debt isn’t problematic by nature, but once it goes out of hand and you become unable to repay it, it’s bound to cause you some issues. It’s easy to determine if your debt is messing with your financial situation if you keep receiving missing payment letters, borrowing money to keep up with bills, feeling that a creditor is pressuring you, or facing legal action from creditors. Leaving a big debt uncontrolled can make it possible for creditors to legally sue you and even repossess your home. If you have a house with no mortgage or up-to-date mortgage, you’re risking losing the house if you choose not to repay your debt. An IVA is a very popular solution if your debts are over 12,000 pounds with no practical way to repay them. We’ll tell you how you can use an IVA to clear up your debts.
How it Works
IVA is an acronym for Individual Voluntary Arrangement; it’s basically an agreement between two or more parties, one of them is you and the other ones are your creditors. The agreement of IVA Northern Ireland is facilitated by an officially authorized debt specialist called ‘Insolvency Practitioner’. The IP takes your one payment and spreads it to cover your debt with your creditors, depending on the terms of the IVA.
Conditions and Restrictions
IVA doesn’t cover all types of debts, the mostly cover unsecured debts like credit card bills, unsecured loans, payday loans, and similar kinds of debt as long as they are not backed by an asset. Your creditors wouldn’t probably agree to an IVA with debt less than 12,000 to 15,000 pounds. The maximum and minimum levels of repayments depend on what your creditors agree to. Once you repay the agreed upon value of collected debt, your IVA automatically ends.
Why Use IVA
There are a lot of benefits that come along with an IVA:
- You’ll avoid doing complex calculations to know exactly how much you can afford to pay back to your creditors, this shall be done by your insolvency practitioner (IP)
- You can expect all your creditors to be contacted and offered a deal by your IP to settle on a reasonable affordable debt
- You become legally immune; your creditors can’t take any legal action against you once they agree to the IVA
- Cessation of interest rates piling up on your debt
Drawbacks
There are some disadvantages with managing your debts using an IVA, your credit rating is going to take a sharp hit and you won’t be able to include all your debts in an IVA if they’re unsecured. The main disadvantage is that if your IVA fails, your creditors can back date your frozen interest, and this can be very costly.
An IVA isn’t a magical solution to all your financial problems, it’s only a way to help you get back on your feet, and it comes with some restrictions. You should know that proceeding with an IVA is dependent on your creditors’ votes, if 75% or more of your debt belong to creditors who agreed to an IVA, the agreement passes. Think about the opportunities an IVA can give you in contrast to the obstacles that you may face then make the decision.
See my disclaimer.
