An individual voluntary arrangement (IVA) is a formal agreement made between you and a creditor. Basically, you agree to pay the creditor reduced payments toward the balance of the debt that you have with that particular creditor. After a specified term, you can expect the remainder of the debt to be dissolved or absorbed. This agreement is a legal binding document that must be set up by a licensed professional, who will also act as your source for general IVA advice.
How does the arrangement work?
This formal debt arrangement must be prepared and submitted to the court on your behalf by a licensed professional. Your creditors will then be contacted by the court and requested to vote either in favor of the debt arrangement or against it. In general, the court will approve this formal debt arrangement as long as creditors representing 25% of your total debt vote for the agreement.
What to expect?
Once you have hired a licensed insolvency professional to create this formal document, it will be submitted to the court. Your creditors will each be provided with the opportunity to review the proposed document and decide if they find the arrangement reasonable. After the agreement has been approved by your creditors, your insolvency professional takes on more of a monitoring role in the repayment process. It is now the responsibility of the licensed insolvency professional to make sure that all agreed upon terms and conditions are properly respected and followed. This professional is also responsible for receiving you monthly payment and applying it to each of your different creditor accounts according to the agreement. There are many UK IVA information websites that can help explain this entire procedure in more depth.
What will the payments look like?
Many people are interested in getting an estimate of what their payments would be in an individual voluntary arrangement. Most individual plans are designed to allow you to make one simple payment to address multiple debts. You can expect to be asked many different questions about your current financial situation. It is also common for an individual on such an arrangement to have their financial situation reviewed periodically for any applicable changes during the repayment term. Most often, these debt arrangements are for a term of 60 months.
What to expect in the end?
After you successfully complete your individual voluntary arrangement, you can expect to be entirely free of any debt hassles, problems, and concerns, even if you did not entirely pay off each balance. Your creditors have agreed to settle the debt for the lower amount.
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