Things you must know about IVA

Individual voluntary arrangement (IVA) is a legal and binding agreement that stops persons or companies you owe money from contacting you and demand for repayment. It puts you on a repayment plan which you must follow if you want to avoid trouble. When you are under IVA creditors are prohibited from pursuing you for debt settlement beyond the IVA arrangements. This article takes you through things you need to know about IVA. 

Your debt should be written off after 60 months of payment 

Under the arrangement, it is usually proposed that any remaining debt should be written off after you make payments for 60 months. It is also necessary that you surrender any equity you have in any property. If you cannot surrender your equity, you will be required to make a further 12 payments. Note that if you cannot make the payments, you risk having your IVA cancelled. If it is cancelled, you will be charged some interest, and your debt will not be written off.

IVA stays on your file for six years

After you start the IVA plan, it will take a total of six years to have it removed on your credit record. You will make the payments for five years, and it will take an extra one year to have it removed from your record. If you make all the payments as per the IVA terms, you will be debt free after the end of the 6th year. It means that after five years, creditors will write off the debt and you will have a clean credit history at the end of the 6th year. 

You need a good Insolvency Practitioner 

You need a competent Insolvency Practitioner who can prove to your creditors that you can raise and afford to pay a certain fraction of the money owed after the expiry of the IVA period. Note that creditors are under no obligations to accept your IVA proposal. But if you have a good plan which demonstrates your desire to pay part of the debt within five years, a prudent creditor should accept it. 

You will need to pay some fees

Just like any other debt relief solutions, IVA has its associated costs. You will need to talk to a debt management company and agree on the amount of money you will have to pay. Some companies will require that you pay their fee after approval of the IVA. The costs vary depending on the level of debt and may be built into the payments you pay every month. In some cases, some debt management companies may negotiate with the creditors so that they agree to pay the IVA fees. 

At this point, you've got enough information to give anyone a valid IVA Debt Advice. But one last thing you should not forget to mention is that if you are in the programme and you own equity in property including a home, it is recommended that you re-mortgage it. It reduces part of your property equity you are expected to realize after 60 months.