A Guide To Single IVAs
Single IVAs, or Individual Voluntary Arrangements, were originally introduced through the Insolvency Act of 1986 by the government. This act provided consumers with an alternative to filing for bankruptcy. IVAs help individuals who are facing financial hardship to settle their outstanding debts in a manageable, structured way. Individual Voluntary Arrangements are available to all members of the general public. Qualifications for the program are based upon monetary circumstances rather than one’s profession, time on the job, or occupation.
A Single Individual Voluntary Arrangement allows consumers to pay off their debts in small, manageable payment amounts. All additional late fees or finance charges are halted. By abiding by the conditions of the IVA proposal, consumers can experience a sense of financial relief.
IVAs are designed to last for a sensible, fixed period of time, usually about five years. The terms and conditions of the repayment schedule are set at the beginning of the agreement, preventing creditors from suddenly demanding more money than originally designated, payments made on a more frequent schedule, or additional fees.
Once the IVA has been established, creditors and consumers must abide by the terms. The consumer must make their payments as scheduled and in the amount agreed. Missing even one payment could nullify the IVA. Creditors agree to cease all communications related to the collection of debt, while also accepting the small payments without incurring additional finance charges or penalties. Once the Single Individual Voluntary Arrangement has been made, the law requires that all creditors discontinue charging interest on any outstanding balances. They may not contact the consumer by letter, phone, or in person to demand payments.
In the beginning of the IVA negotiations, the consumer and creditor must agree to a small monthly payment. In some instances, repayment proposals could be based on a one-off sum. The length of repayment may vary, but tends to continue for about five years in most cases. If the consumer keeps his end of the bargain, making payments on time and in the amount agreed, the debt is removed from their credit rating.
There are other benefits of entering into a Single IVA as well. Because it is a legally binding arrangement, consumers are always aware of where they stand in the repayment process and how much longer it will take to be debt free. The IVA is a private business agreement, one which is undertaken between the creditor and the consumer. Therefore, there will not be any public humiliation through listings in the newspaper, such as in the case of bankruptcy. Consumers need not worry about the IVAs affect on their professional status or job security, as employers will never be contacted by any government or financial entity. Finally, the price of entering into a Single IVA is much less than the Official Receiver charges or court fees of filing for bankruptcy.
A Single Individual Voluntary Arrangement is a wise choice for anyone who would benefit from lower payment amounts, reduced communications from debt collectors, and avoidance of bankruptcy or legal action. It is not intended for those who have little to no income or who could not enter into a binding legal contract.