These days, financial problems that seem dire are anything but rare. More of us than ever before are finding ourselves struggling to stay afloat, and in many cases facing bankruptcy. However, if you’re in this position there are more options than you may have thought, as long as you get the right advice.
Over time, the government have introduced a series of measures to help people from having to become bankrupt, and Individual Voluntary Agreements are one of those. The reality for your creditors is that if you go bankrupt, they will likely receive fewer of your funds owed than if they accept an IVA.
IVAs and other legal matters relating to bankruptcy are handled by Insolvency Practitioners, who are authorised to advise and carry out these procedures within the law. As well as taking forward the legal processes involved, an Insolvency Practitioner is also a specialist in advising people and companies about how best to handle these sorts of financial difficulties. A practitioner can therefore help you to figure out both whether an IVA is likely to help your situation, and also how best to go about the agreement itself.
When you agree to an IVA, you are agreeing to a contract outlining what you can pay back to your creditors over a set period of time. The agreement is based on what you can realistically afford, and is therefore likely to give the creditors less income than they would receive from you if you kept up with your bills to them as normal. It’s imperative that you try to only commit to an agreement that you are sure you can afford, as the IVA is a legal contract, and will only work on the basis that you meet its terms. We hear a lot in the press about people having their debts ’written off’ and indeed this does sometimes happen with a chunk of the debts that a person or company owes, but there is no guarantee that this will happen in any one case, and it’s safer therefore that you do not assume this will happen for you.
In order to use an IVA, your Insolvency Practitioner will present your proposal to the creditors through the court system. As an IVA is normally used when you have multiple creditors to whom you owe debt, they will usually then meet and have a vote to decide whether or not to accept the agreement.
One of the main advantages to having an IVA, is that providing the creditors agree to it, and you keep to the terms of the agreement, they cannot pursue you legally for the debt as they may do otherwise. Another advantage is that the debts that you owe are ’frozen’ in the sense that they will not generally accumulate additional interest during the time outlined in the agreement. This means that the debt immediately becomes significantly more manageable to you, and stops growing in the way that it more than likely has been up until this point.
An Individual Voluntary Arrangement could be the answer to your debt problems. Contact IVA.net to find out if you can apply for an IVA and write off some of your debts.