Getting independent IVA advice can be tricky, because most sources on the web will ultimately just be trying to sell you their services. It is always best to apply to a few good companies and compare their proposals, and I will tell you how to do that shortly. First of all I want to explain what an IVA is and what it should be used for.
IVA stands for Individual Voluntary Arrangement and the most important thing to be clear about is that they are only available in the UK and therefore only an options for UK residents. It is a unique solution to serious debt problems that the government came up with, to provide an alternative to filing for bankruptcy.
An Individual Voluntary Arrangement is a formal agreement, so they are not like debt management plans, which are informal and more flexible. There are some definite advantages to using an IVA compared to becoming bankrupt, but it is still a serious step to take, and will not be right for everyone. They are designed for very serious debt situations, where you are experiencing hardship and are unable to meet your commitments in terms of repaying the debts you have.
The equivalent process for US residents would be debt settlement, which again is for people who are genuinely struggling and involves writing off a lot of the debt. The basic principle with an IVA is that you make regular affordable payments to the IVA provider each month for a fixed period, and at the end of the period the rest of your debts are normally written off. There are many advantages to this, not least that a large part of your debt could eventually be written off and you know exactly when you will be debt free again.
Other positive points are that your monthly payment will be within what you can afford and you only have the one payment to think about. The IVA provider will share the money among your creditors, who will no longer be able to pursue you for payment. Unlike other informal agreements, an IVA gives you protection from being sued for debt.
A big advantage with IVAs being formal binding agreements is that if you can get 75% of your creditors to agree to it, the rest are legally bound to go along with it too. The percentage relates to the proportion of the total debt, not the number of creditors, so if 75% of your debt was owed to one company, you would only require the agreement of that one creditor in order to set up an IVA. This can be very useful if you have the odd uncooperative creditor.
As Scottish law is different to the rest of the UK, there is an equivalent of the Individual Voluntary Arrangement for Scottish residents, which is called a Protected Trust Deed. Good IVA providers will often provide these too.
Individual Voluntary Arrangements are only appropriate for very serious debt situations, usually for debts in excess of •£15,000 to a few different creditors. You will also need to have a source of income that allows you to make a reasonable monthly payment towards your debts. If your situation is not quite so serious, you may be more suited to a debt management plan instead. A good debt company will look at your finances and advise you which option is most appropriate for your situation.
It is important to find a reliable IVA provider that you can trust to give you honest advice. You should always apply to perhaps three different companies so that you can make an informed judgement about which is offering the best value. You can avoid unproven companies by following recommendations for some of the most reputable IVA companies.
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