Individual Voluntary Agreements (IVA) in the UK
What are IVA's Programmes
Although Individual Voluntary Agreement (IVA) started more than two decades ago, in 1986, quite a large number of people in the UK are still not familiar with this programme, i.e. it was the Insolvency Act that brought about the IVA's.
Due to the high cost of living that is not matched by the salaries and wages paid, many people inevitably find themselves in debt. The wide gap consequently makes it very difficult for some people to afford repaying all their accrued debts. IVA is intended to help such people to release themselves from the clutches of their lenders.
IVA is an acronym standing for Individual Voluntary Agreement. This is an agreement you make that enables you to give a set amount, which you will need to pay every month to offset your debts. The IVA helps you to repay that set sum on a monthly basis, and as a result minimize the overall debt you have. The IVA takes five years in many cases. After the period of this agreement, whatever balance remains is waived.
IVA's loans may be your best alternative in a bid to avoid being declared bankrupt. Hence IVA will help you to avoid the negative impact that would otherwise face your credit score.
In addition, there are some conditions that may be adversely affected by a declaration of bankruptcy. For example, one may risk losing his job when he becomes bankrupt. Indeed, rather than damage your credit rating, IVA will help you to improve on an otherwise poor credit score. On the other hand, if you happen to be declared bankrupt, your credit score will take a plunge.
How to Apply for an IVA's in the UK?
IVA's will offer you an opportunity to set monthly repayments that are relatively affordable. This, in turn, will give you a way out of your debts. It is therefore beneficial to be
knowledgeable on IVA's, which will allow you to take advantage of them should the need arise. Here are the necessary steps towards getting an IVA.
When you intend to secure IVA's you need to get an Insolvency Practitioner (IP). The Insolvency Practitioner must have the legal capability to draft an IVA. In many cases, this person is also an accountant.
When the IP wants to start the IVA process, he/she will need to make an 'interim order' application to the county court. The interim order stops any creditor from taking steps towards declaration of bankruptcy against the debtor. After this, the IP and the individual will write an IVA between them. All concerned creditors are then issued with the IVA, and are allowed 14 days in which they have to go to a 'creditors meeting'. Within this period, they may also either disagree or agree with the terms laid down in the IVA.
In order for an IVA to take effect, at least 75% of the creditors will need to agree with it. Upon an approval of the IVA, the IP will be responsible for supervising the debtor as he/she repays the set monthly installments.
In the event than an IVA is not approved, the debtor will have to wait for 12 months before applying for another interim order.
