Ever heard of an IVA and thought what is it? This might be the right time to find out more. IVA stands for individual voluntary arrangement. It was started in the eighties to help businesses stay out of bankruptcy. However it was so successful, that it is now being used for people in financial difficulty. The main reason behind this is because the program is so simple.
Nobody plans on not being able to repay their debt, more often than not it is just the circumstances we find ourselves in, redundancy, divorce, ill health, stagnant wages or the ever increasing cost of living, for some the effect of any of this is overwhelming. And for those people entering an IVA will benefit them.
IVA is operated in a simple way and this has meant widespread success. The debtor monthly sets aside an affordable amount of money to repay to the IVA. This amount is based on what can reasonably be afforded once all priority debts are paid, and that you have enough money to live. It is completely voluntary. You cannot be forced to do the IVA. In some cases as much as seventy five percent of debt is written off. It is an opportunity to help people get out of debt.
Starting an IVA will reduce the amount of repayments you need to make to your creditors monthly. You will agree to a repayment plan that you can comfortably stick to. This will also stop the creditors ‘chasing’ you or from making any frightening phone calls. After sixty months it is possible to be debt free after paying twenty five percent of the total debt. In an IVA the debtor buys time and can prevent the loss of assets. Interest rates and other fees can be frozen. With an IVA any debt not paid off at the end of the term will be written off.
The IVA is a legally binding agreement and normally lasts for around five years. At the end of the term the person is considered debt free. Neither party can change their mind half way through they must finish the payment plan.
There are many choices for people in financial difficulty. An IVA is one of the best for some debtors to take advantage off. There is only one monthly bill to worry about and creditors will not be able to harass the debtors. With the IVA it is a way to get all financial problems cleared up and start over again. Your credit rating will definitely be affected but given time and effort this will improve. For a lot of people this is the best option.
Showing posts with label IVA. Show all posts
Showing posts with label IVA. Show all posts
Monday, 19 December 2011
Monday, 24 October 2011
IVA and Trust Deed Debt Advice
IVA and Trust Deed Debt
The difference between an IVA and a Trust Deed is minimal, although significant. In Scotland, the debt solution is called a Protected Trust Deed, while the rest of the UK calls it an IVA. The difference is the law.
Both debt solutions enable you to repay a proportion of your debt (what you can afford) and have the rest written off. However, there are subtle differences between an IVA and Trust Deed for instance;
- They are governed by a different legal system
- An IVA lasts usually for a minimum of 5 years (6 if you have property)
- A Trust deed usually lasts for a minimum of 3 years
- If you have equity in your property in an IVA then the solution can last for an extra year
- If you have equity in your property in a Trust Deed then you must remortgage or refinance (possibly even sell) the house
- The minimum amount of unsecured debt to enter a Trust Deed is typically £10,000, whereas it's £12,500 in an IVA
- When you put the proposal to your creditors the system is completely different (1/3rd in value must accept or majority in number of creditors for a Trust Deed, in an IVA its 75% must accept)
The benefits of an IVA and Trust Deed
There are both benefits and negatives of an IVA and Trust Deed. The benefits include;
- Only repay what you can afford each month
- Stop creditors pestering you; the IVA / Trust Deed company will look after that
- The solution is legally binding so if your creditors agree to your IVA / Trust Deed then they can't go back on the agreement
The negatives of an IVA and Trust Deed
- The IVA and Trust Deed will have a negative impact on your credit rating
- If the solution fails you would face Bankruptcy
- Your creditors don't have to accept your proposal so make it as good as possible
The difference between an IVA and a Trust Deed is minimal, although significant. In Scotland, the debt solution is called a Protected Trust Deed, while the rest of the UK calls it an IVA. The difference is the law.
Both debt solutions enable you to repay a proportion of your debt (what you can afford) and have the rest written off. However, there are subtle differences between an IVA and Trust Deed for instance;
- They are governed by a different legal system
- An IVA lasts usually for a minimum of 5 years (6 if you have property)
- A Trust deed usually lasts for a minimum of 3 years
- If you have equity in your property in an IVA then the solution can last for an extra year
- If you have equity in your property in a Trust Deed then you must remortgage or refinance (possibly even sell) the house
- The minimum amount of unsecured debt to enter a Trust Deed is typically £10,000, whereas it's £12,500 in an IVA
- When you put the proposal to your creditors the system is completely different (1/3rd in value must accept or majority in number of creditors for a Trust Deed, in an IVA its 75% must accept)
The benefits of an IVA and Trust Deed
There are both benefits and negatives of an IVA and Trust Deed. The benefits include;
- Only repay what you can afford each month
- Stop creditors pestering you; the IVA / Trust Deed company will look after that
- The solution is legally binding so if your creditors agree to your IVA / Trust Deed then they can't go back on the agreement
The negatives of an IVA and Trust Deed
- The IVA and Trust Deed will have a negative impact on your credit rating
- If the solution fails you would face Bankruptcy
- Your creditors don't have to accept your proposal so make it as good as possible
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