You may have heard IVA’s mentioned as a brilliant debt solution but you are probably not too clear on what they are. Basically IVA stands for Individual Voluntary Agreement. People who take out IVA’s can have as much as 90% of their debts written off by the law, meaning that they will never have to pay them back. For people struggling with debt, this could be a dream come true but it is by no means an easy solution.
An IVA is an agreement which is drawn up by creditors and debtors and the Licensed Insolvency Practitioner. It is a legal process and once it has been drawn up, creditors must abide by it and cannot go after their debtors for unpaid debt.
3-5 year period
IVA’s allow debtors to write off 90% of their debt but this does not happen straight away. First, there is a 3-5 year period in which the debtor must pay a single monthly repayment, which they can afford, this will be shared between their creditors. Once this period is up, the remaining debt will be fully written off and the creditors will no longer be able to peruse the debtor.
A True Solution
Many people think that IVA’s sound like they are too good to be true and in many ways they are too good but they are also very true. They are an excellent solution for both debtors and creditors. Most creditors will accept IVA’s because they will at least get something back and they will no longer have to spend money, time and effort chasing up debtors.
Debtors love them because they will only have to pay a small sum for five years and then have their debt written off, which is a great relief. IVA’s only take a couple of months to set up and debtors do not have to pay interest during their repayment period. Creditors are not able to contact debtors in the period either, so it really is a weight off the shoulders of anyone who is seriously struggling with their debt repayments and pushy creditors.
