subject: Individual Voluntary Arrangement UK - Advice On Using IVAs [print this page] Individual Voluntary Arrangement UK - Advice On Using IVAs
There are several thousand UK residents who become overwhelmed by debt each year and one of the biggest contributing factors in this is the use of credit cards, store cards and similar forms of credit. Unfortunately in this age we are all people who have to live on credit because it feels like the most basic standard of living requires us to spend more than we have at our immediate disposal. Sometimes trying to pay back that credit gets to be too much if the size of the debt is allowed to escalate too far.
If you can catch the situation early enough before it becomes too serious, a debt management plan can provide the answer to getting you back in the black. Unfortunately many people do not catch it in time and the situation gets to the point where it is simply impossible to repay the debts you have out of your available income within a reasonable timeframe. Before giving up completely and filing for bankruptcy you should try an individual voluntary arrangement (or IVA), as this allows you to write off a large part of your debts and just repay a portion of them.
What is an Individual Voluntary Arrangement UK?
A UK IVA is a legal, binding agreement between your creditors and you, where you agree to pay them a proportion of what you owe them by making regular payments based on what you can afford. You usually have to make the regular payments for a period of five years and after that any remaining debts are written off and you are free from debt again.
Only a licensed professional can set up this arrangement, which means you will need to contact a UK debt management company that will set up the voluntary arrangement for you. As part of this process they will appoint an insolvency practitioner to help you.
The insolvency practitioner will ask you questions about your financial situation. It is important that you give him all the information that is requested. The information is then used to apply for an Interim Order. A meeting will have to be held in which the creditors will vote on the arrangement. Creditors representing at least 75% of the monetary value of your debts have to agree to the individual voluntary arrangement for it to be put into force. If you get that agreement, any creditors who do not agree are also bound by it. Since it is legally binding once it does pass the creditors must stick to the arrangement and neither they nor you can easily change their minds.
Who Should Apply For an IVA?
An individual voluntary arrangement is not right for everyone. Some people can better benefit from a debt management plan if they are not deeply in debt. This particular type of arrangement is only available to UK residents. You may want to apply for a voluntary arrangement if:
You have a steady income but have become overcome with debt.
You do not want to lose your property like you would in a bankruptcy.
You do not want to lose your particular employment position by filing bankruptcy.
You owe more than 15,000 to several different creditors.
An individual voluntary arrangement does not have such a negative impact on your credit as bankruptcy does. It may not be as serious as bankruptcy since you are making payments to you creditors, but it will stay on your credit report for the duration of the payment period.
