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Individual Voluntary Arrangement – Freezers of Debt

Wallets getting empty and stress zones getting alarmingly saturated would be the paradigm of a working adult’s agony. Duties and distress share a relationship so proportionate as to drive an individual to a precarious mental and physical state. What is the one factor that sucks all the vigor out of these diligent souls? Debts would be the undisputed winner to quash the inner-tranquility and replace it with desperation.

With age comes the growth of inevitable needs and potential liabilities. As the circle of life expands with more people entering it, expenses shoot up to untraceable extends. When numbers in the account fall, people tend to feed on external agencies for survival. A complete pay off of these replenishing debts is almost always impossible as the financial requirements to be met only increase with time. While some give up halfway through the distress, many others keep burrowing for better solutions.

IVA is one effective panacea to the anxieties that eat up the productive insides of individuals. Many debtors have already sought this solution to alleviate the blazing fires of bankruptcy.

What is IVA?

Time is one factor that curbs the avenues to a perfect solution, which keeps constricting until financial obliteration. Individual Voluntary Arrangement is a legal agreement that binds the debtor and creditor to a rather loose contract which stands in favor of both the parties. With this agreement, the creditors are instructed not to indulge in any form of dreadful acts to extract money from the debtors. The money that they owe the organizations or individuals is to be paid within the specified time.

Working of an IVA

The IVA approved by a court operates to help the debtors with their repayment. It has to have a higher authority to handle the deals, commonly known as an Insolvency Practitioner. They will be in contact with both the debtor and creditor to ensure that no extortion or delay in payment is happening. Depending on the amount to be repaid, the insolvency practitioner will charge a fee on the debtor. In total, the sum could go up to hefty figures that are again unaffordable to many of the debtors. Several debt management agencies function to help the debtors with the IVA procedures, for which they charge a huge amount that adds up to the practitioner’s fees. With proper iva advice and guidance, the debtors are less likely to be subject to any form of scams or excessive charges.

To apply for an IVA, one has to submit documents proving regular income over the period set by the court, which usually ranges from five to six years. The insolvency practitioner, who would be an accountant or a lawyer, will check with all the legalities of an IVA and work accordingly.

Debts within an IVA

Although the IVA is beneficial to many of the debtors, it could also impose some risks on them. They are often misinformed about the working methods of IVA that they go further with including debts that aren’t categorized under it. No limits have been set to the number of debts that can be included in an IVA, but having more than one creditor is recommended when applying for one.

Debtors Can Include:

  • Personal loans
  • Credit cards
  • Arrears of gas, water, and electricity
  • Overdrafts
  • Catalogues
  • Payday loans
  • Pending tax and national insurance payments
  • Store cards
  • Money owing to friends or family

Debtors Cannot Include:

  • Student loans
  • Arrears of maintenance ordered by a court, child support, TV license
  • Social Fund loans
  • Fines by any magistrates’ court

Missed Payments

Any payment break that occurs within the period has to be informed to the insolvency practitioner in advance. The amount that is skipped during emergencies would either be summed up with the last installment or would be set for regular payment by extending the repayment period.

Conclusion

Debts do not last for a lifetime, for as long as one has the will to work harder to repay it. With the option of IVA, the debtors are provided with a lighted avenue to a stable future. Never take it as an opportunity to evade the charges being imposed or to live extravagantly, as it only piles up more liabilities on to the shoulders. Peruse the policies and working regulations of the IVA before taking that convenient path to secure living.

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