Things to consider in an IVA
Date posted: September 25, 2014 by Paddy Byrne
If you’re struggling with debts, it can be tempting to take decisions quickly without taking the proper time to consider them fully. However if you do take this time you are far more likely to reach decisions that will help rather than hinder you in the long term. Your choices can seem few and far between when you’re having debt troubles, but with the right advice you may well find you have more options than you think.
Individual voluntary Arrangements have helped many people to get an unmanageable debt situation under control. However, IVAs are only useful to people in the right circumstances, and getting the right IVA proposal put together is of paramount importance. IVA payment plans are flexible, and should be tailored to your own financial circumstances, while allowing you to pay back your debts to the best of your ability.
Your Insolvency Practitioner will help and advise you when it comes to putting forward a payment plan for your IVA. Your IVA proposal will outline how much you are committing to paying back over a set period, also outlined in the proposal. This amount will typically involve you making monthly payments, and it may optionally also involve releasing equity from your home if you own one.
When your IVA proposal is put to the creditors through the courts, they will have the chance to consider and vote on it. There is also a chance that they will request changes to it. Your IP will discuss any proposed changes with you and ensure that you fully understand the implications before you sign up for anything.
An IVA is a legal contract. It binds you and your creditors to the agreement. Naturally this gives you certain rights as well as certain responsibilities, so you should make sure that you fully understand these before the IVA goes ahead.
Failure to make payments
If you fail to keep up with the IVA payments, there is a chance that the IVA will fail. In this case you may end up being pursued for the debts through the courts, as your creditors are only prevented from doing this if you keep to the terms of the IVA.
The amount that you are committing to pay monthly towards your IVA must be realistically manageable to you. You should still be able to enjoy a decent standard of living as well. Make sure you do not agree to an IVA that involves making payments that you do not feel you can manage, as this is likely to make your financial situation worse rather than better.
No further credit during IVA
While the IVA is ongoing you will not be able to get any further credit. This may seem like a serious restriction however, it does make it far more likely that you will manage to use the IVA to clear your debts. Once the IVA is complete you will again be able to seek credit, with the debts covered by the IVA effectively settled and put behind you.