Is It Possible To Get Out of Debt With An IVA?

If there is one concern that just about all people share, it is finances. No matter how much money you make or what your current financial situation is, there is always the risk of not having financial security in the future hanging over your head. This is why a lot of people try to secure themselves in any way possible. Some invest any money they have in stocks or real estate. Others try saving up in the hopes that it would ensure some financial stability in the future. But those aren’t always feasible options for a lot of people, especially if you are in debt. If that is the case, you need to first find a way out so you could start worrying about the future. 

One of the options people consider is an individual voluntary arrangement (IVA), but how helpful is it?

Can an IVA help you get out of debt? 

In a nutshell, yes, it can. An Individual Voluntary Arrangement is a way for you to pay off your debts to all creditors at a reasonable rate. It helps you avoid declaring bankruptcy, which can be quite problematic for your life in more ways than one. Bankruptcy can halt your professional life and cause all sorts of problems, especially in sectors like the legal and financial ones, and it can also make it impossible for you to get loans or mortgages. An IVA, on the other hand, spares you this trouble as you get to work things out by paying a very flexible debt, and it has a lot of benefits, too. 

How does it work? 

The individual voluntary arrangement is a binding statement that is legally documented between your creditors and yourself. It is considered as a form of insolvency that could help you get out of debt, but that means you will need to hire an insolvency practitioner to set the whole thing up and be responsible for managing how you will pay your creditors for a duration that could be as high up as 5 years. You should know, though, that you need to have a steady source of income so you could qualify for an IVA, or else the whole deal will probably not work out.

Will I lose any assets? 

This is most people’s main concern, especially considering how an alternative like bankruptcy can have you lose all assets like your home. With an individual voluntary arrangement, this doesn’t need to happen. But you should ask an experienced insolvency practitioner first to understand whether your home is at risk or not, because if you do own one, you might need to remortgage it so that the practitioners you hired could pay creditors using the equity released from the remortgaging. The IVA company or insolvency practitioners might elect to leave your home out of the arrangement, but that is not likely to happen. 

You will also get to keep other assets you possess, as long as they are not considered to be luxuries and surplus to what you need to live, like a vacation home. This means you can keep the car that you need to go to work, life insurance, and other similar assets to your name. 

Debts are frozen

As soon as your IVA is set up, all your debts will be frozen. This means you will no longer face any interest rates or have to deal with incurred charges. Also, any legal proceedings against you will be on hold, and your insolvency practitioner might even be able to pull that off before the individual voluntary arrangement goes through. So, that’s definitely a bonus because you will no longer need to worry about any of those disrupting your life.

Confidentiality 

One of the biggest perks of an IVA is the fact that it is confidential. So, no one needs to know about your current financial status or the fact that you have an IVA, except for your insolvency practitioner and creditors. This is, of course, unlike bankruptcy where it is made public in the local newspapers! With an IVA, the only people that find out are those you tell, and this helps spare you from any trouble at work or in your personal life.

Even your creditors can’t annoy you once the IVA is in place, which is quite a relief to any person in debt. Any creditors are bound by the IVA just as much as you are, and they can’t take any legal action against you as long as you meet your monthly payments. So, in short, the IVA is one of the best ways to get out of debt with little complications.