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The Permanence of an IVA

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An individual voluntary arrangement (IVA) can bring many benefits to persons that proceed with one in the face of overwhelming debt levels. Interest should stop, included creditors cannot take legal action against you, and a third party stands between you and your creditors. It's not the right option for everyone though, and an informal debt management plan, debt relief order, or bankruptcy might be a better fit for some people.

 

These IVA benefits do not however come without responsibilities. It's a formal legal agreement between a debtor, his/her creditors, and the IVA provider. Each party gains rights and each party also gains responsibilities. The debtor must keep their IVA firm up to date with details of their circumstances (especially if they change), make the IVA firm aware of any windfalls that they receive (some or all of which might have to be paid over), and make the agreed payments when they become due.

Some people may come to find these rules restrictive and problematic, even if there was initially a great sense of relief that the debts were subject to greater control once the IVA was up and running. This sometimes leaves people wishing to simply exit the IVA so that they have greater financial freedom. Other people may come to expect an improvement in their circumstances, for example through a pay increase or the prospect of receiving a lump sum in the near future. They may then wish to set the individual voluntary arrangement aside in order that they can work with their creditors directly again.

It's unlikely that an easy exit from the IVA will exist given its' legal status. Failing to comply with the requests of the IVA firm (or failing to make the due payments) may result in an IVA being terminated in time, but there is some risk that this might also result in the individual being bankrupted. Assets may be put in some jeopardy. A termination of the IVA is also likely to result in little debt being repaid as a substantial part of the initial contributions are likely to have been consumed by fees.

What does this mean for an individual who is contemplating starting an individual voluntary arrangement? Firstly, they should be 100% certain that this is the right option for them. This can only be achieved by taking reputable advice (we'd suggest multiple sources of advice as well) in order that all options can be considered and compared in advance of commitment. Secondly, they must take time to think through what will be the negatives of entering an IVA so that they are prepared. Forums may be useful in this respect as they contain positive and negative views from IVA users. The reality is that all debt solutions have advantages and disadvantages; don't be "blown away" by an IVA sales-pitch that promises the world without covering all of the angles.

IVA Advice Forum may be useful for anyone who is thinking about starting an individual voluntary arrangement. There is information on the alternatives and frank discussion regarding the pros and cons of an IVA. Seeing "both sides of the coin" is the best way to confirm in your mind that an IVA represents the best prospect for you of dealing with your debts in a way that you are comfortable with.

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