If you and your Insolvency Practitioner have decided to propose an IVA for your debts, it is incredibly important that the arrangement itself is workable, making the IVA an effective measure in getting your finances in shape.
Payments
The purpose of an Individual Voluntary Arrangement is to help you to clear your debts in some way if you cannot manage them according to current agreements that you have. For this reason it’s imperative that you can actually manage the IVA payments.
Together with your Insolvency Practitioner, you will be able to come up with a proposed arrangement that both suits you and also hopefully appeals to your creditors enough for them to accept it.
Once an IVA starts, you will be required to make the payments into a single pot of funds. Your IP will handle the distributing of these funds to your creditors and so you only have to worry about making the payments.
Reviews
Your IVA payments will be reviewed throughout the term of the arrangement, which typically lasts about five years. If the IP thinks that your circumstances have changed during this time, they may suggest changes to the arrangement.
If your circumstances change for the better financially, your IP may ask you to increase the payments. If you are a homeowner, you may also be required to release equity at some stage in the agreement.
If your circumstances change for the worse, and you are unable to meet the IVA payments, your IP may be able to carry out further negotiation with your creditors and hopefully keep the IVA going. In some cases you may be able to take a payment holiday if you’re having short-term problems, but this is something that you need to speak to your IP about.
Failure to meet payments
If you can’t make the payments and the creditors don’t agree to a change, the agreement will have failed and your creditors will then be free to pursue your debts legally. For this reason it really is important that you get the right arrangement in the first place, and one that you can realistically stick to over time.
As long as you manage to keep to the terms of an IVA, you can work towards having your debts settled in the future. Although you won’t be able to get further credit during the term of the arrangement, once it’s finished you will be able to work towards improving your credit rating again.