If you have debt from loans that you are failing or are going to fail to make the payments for, there are a number of things that you can do. Individual Voluntary Arrangements (IVAs) can help in situations where unsecured debt has become unmanageable. IVAs are really intended for unsecured debt, and therefore may not help if your loan debt is secured against an asset such as a house or car.
Restrictions
Debts including credit cards and unsecured loans are the typical type of debt that an IVA is used for. IVAs are normally used where the debts total at least £12,000 and are owed to at least 3 different lenders.
If this is the case then an IVA may be a helpful tool in getting your finances under control, and you should use the services of an Insolvency Practitioner to proceed.
If these restrictions do not apply to you, it is still imperative that you get sound advice if you cannot manage your loan payments – you may find that there are other measures you can use to secure yourself.
Process
If you have decided, with the help of an IP, to go for an IVA, they will be able to guide you throughout the process. The first thing an IP normally does is undertake a thorough going over of your financial state, so that they can give you the best advice possible. Your income, outgoings, assets and debts will all weigh into the decision as to what should happen next.
In order to use an IVA, you will normally be required to pay at least around £200 per month, and so you need to be able to manage this reasonably while still maintaining a good standard of living.
Proposal
Your lenders will be presented with a proposal regarding your IVA, and they will get to vote on it. Although they naturally tend to receive less of your borrowing back through an IVA than what they would according to your original agreements, lenders realise that if you become bankrupt as a result of not being able to pay, then they will likely receive even less. This means that lenders do tend to be open to IVAs, although sometimes they will ask for amendments to be made to your proposal before they accept it.
Security
As soon as the process of exploring an IVA begins, your lenders will not be able to take any legal action against you for the debt. Your IP will get an Interim Order in the first instance, and once the IVA is up and running you are protected from any legal action as long as you keep to the arrangement.
Once the IVA period has run, and providing you have kept up with the payments, your debts will be clear and you can move on from them. Even where you have only paid back a part of the total debt, as long as you have fulfilled the requirements of the IVA the debts will be settled.