Why Consider a Debt Consolidation IVA

Why Consider a Debt Consolidation IVA

Following recent changes in the law, Individual voluntary arrangements have been brought in by the government. An Individual voluntary arrangement is an easy alternative to bankruptcy and carries none of the stigma. It's an excellent way to deal with insolvency or personal debt issues. In accordance with government rules, a properly drawn up IVA will write off up to 60 percent (sometimes more) of personal debt immediately.

The IVA will be compiled by an insolvency practitioner who is properly qualified in these matters and will have a good working knowledge of personal insolvency procedures. The whole of the debt and the total number of creditors will be taken into account together. Income and expenses of the client will also be considered and a monthly or weekly expenses list will be compiled with the consent of both the client and the creditors. The essential household bills will be paid before any of the creditors are considered. Total debt will be diminished in this way by sixty percent or more, and the monies left over is used to reduce any remaining debt in this very structured way and on a considerably reduced basis.

Individual voluntary arrangements are generally set up to run over the course of a five year span, although sometimes it may be altered to fit with personal requirements. In Scotland, where these arrangements are known as Trust deeds or protected trust deeds, the term is typically three years but in some cases may be for four or five years. With both the IVA and the trust deed the client is defended from creditors by the various insolvency laws and their debts are completely and absolutely discharged at the close of the term (however long that may be set).

An Individual voluntary arrangement is a legal document and there are a number of things that creditors are forbidden by law to do now the IVA has been put into place. This includes not being permitted to telephone you or send you letters, or indeed to contact you in any way. If the creditor or his one of his agents (i.e. a debt collecting company) even attempts to contact you then they are deemed to be in breach of the insolvency laws. All creditors (such as banks, credit card companies, etc.) must stop all phone calls and letters and must not attempt to impede the day to day life of the client.

Not everybody can qualify for an IVA. There are certain restrictions on who can apply and who cannot. Usually applicants need to have a regular income from a verifiable source and also a surplus monthly sum in excess of ordinary expenditure to finance the repayments themselves, though this need not be a large amount. Those not qualifying for an IVA will likely qualify for a similar debt management programme, so it's always worth applying just to see.

An IVA is therefore an excellent way of managing your debt over the long term and it implies a completely new start in life. Most of your debt will be wiped off immediately, before you even start your repayments. The rest is paid off after five years and at the end of the term the debt is written off completely and the creditors will be satisfied. A new start is possible. That new start can begin today. It's your choice.

Many people make the mistake of opting for a so-called debt consolidation loan, which only gets them into more debt. An IVA writes off most of your debt on day one and is the legal way to a debt-free life, chosen by thousands of wise people every month.