Dealing with debts is a huge problem that many of us face in our lives. As troubling as the situation might be, there is always a way to improve your financial problems and pay off your debts. One of the proven ways to get rid of your debts is an IVA Plan. IVA stands for individual voluntary arrangement. This form of arrangement is a formal agreement. The purpose of the IVA Plan is to help you put in place an agreement with your creditors to repay your debts at an affordable amount. Keep reading this article to find more about this amazing opportunity.
Some Essential Info
With an IVA, you enter a legal agreement with your creditors. An Insolvency Practitioner is the only person allowed by the law to set up an IVA Plan for you. The best thing about an IVA Plan is that it allows you to convince creditors of the amount you can afford to pay. After you enter an agreement, you will have the choice to repay your debt as a one-off payment, or you can repay the fixed amount in 2-3 months.
If you go down the route of repaying the debts in a 2-3 months period, your finances will be reviewed each year. All of your creditors will receive your latest progress report to better understand your financial condition.
Applying For IVAs
As mentioned earlier, only an Insolvency Practitioner can set up the IVA Plan for you. They will review your financial position and the condition of your creditors. But to approve your IVA Plan request or not will depend on your lenders. Voting will be held among your creditors, and 75% of the creditors will have to vote for you so you can get the IVA Plan approved. Once you have legally entered an agreement with your creditors, you will be protected legally to repay the debt payments as you have agreed. Experts recommend that you get the right advice about getting an IVA Plan to help you make the right choice.
During an IVA, your creditors ensure that you are not taking any other loans and are only focusing on repaying your previous debts. The rules of the IVA Plan limit you from any other form of credit like loans etc. Your Insolvency Practitioner will look after your activities of receiving any more credit. Without prior permission from your IP, you cannot get credit cards, personal loans, or overdrafts. You are also not allowed to get any payday loans or informal loans from family or friends.
Even if your Insolvency Practitioner allows you to go on with taking more credit, most of the credit providers will reject your application as your financial history will show that you have defaulted on your previous debts. The IVA Plan also limits you from borrowing more than £500 without prior permission as it goes against the terms of the IVA Plan. Your best choice in a financial emergency is to have a chat with your IVA provider rather than getting a loan without informing the parties.
Salary Reduction During IVA Plan
Most of the salary deductions plans are just like borrowing money from your loved ones. Your employer, in essence, gives you credit in a Salary Deduction plan. The season ticket loans and work schemes come under the traditional salary reductions. As your Salary Deduction plan can have a direct impact on your IVA agreement, you are not allowed to enter any of such schemes without prior agreement with your IVA provider. Your IVA provider is your Go-To resource to understand all of your IVA Plan terms and conditions. Don’t hesitate to discuss your financial matters with them.