If you`re struggling to keep up with your debt obligations, an individual voluntary arrangement (IVA) could be a suitable solution for you. An IVA is a legal agreement between you and your creditors that allows you to pay off your debts over a set period of time, usually 5 years, while providing you with protection against any legal action taken by your creditors.
So, what exactly is an IVA creditors agreement?
An IVA creditors agreement is a legally binding agreement between you and your creditors that outlines the terms and conditions of your IVA. It is a document that details the agreed-upon monthly payments that you will make to your creditors over the course of your IVA.
When you enter into an IVA, your creditors will be asked to vote on the proposed IVA creditors agreement. For the IVA to be approved, 75% of your creditors by value (not number) must agree to the terms of the IVA. Once approved, the agreement will be binding to all parties, including those creditors who did not vote in favor of it.
The IVA creditors agreement typically includes details such as:
1. The amount of money you will pay each month for the duration of the IVA.
2. The length of the IVA, which is usually 5 years.
3. Any assets that you will be required to sell to help pay off your debts.
4. Any restrictions on borrowing money during the IVA.
5. The consequences of missing payments or failing to comply with the terms of the agreement.
6. The release of any remaining debts at the end of the IVA, assuming all payments have been made as agreed.
One of the main advantages of an IVA is that it can help you avoid bankruptcy while still allowing you to pay off your debts. It can also help you avoid legal action from your creditors, such as court proceedings or wage garnishment.
However, it`s important to understand that an IVA is not a quick fix for your debt problems. It requires a long-term commitment to regular payments and strict budgeting. You will also need to be aware of the potential impact on your credit score and your ability to borrow money in the future.
If you`re considering an IVA, it`s important to seek the advice of a professional debt adviser or insolvency practitioner who can guide you through the process and help you decide if it`s the right solution for you.