Iva Services: Better Alternative to Bankruptcy

By: Gracy Bonsu
Individual Voluntary Agreement is a formal and legal binding agreement between a debtor and his creditors. This agreement is designed in such a manner that it lower downs the burden of borrowers or creditors in a given time period of say five years or less. As per the agreement, lender or creditor helps borrowers to distribute a single monthly payment equally between participating creditors.

This individual voluntary agreement requires the approval of the court and it is preceded under the control of a supervisor. This proceeding is carried on by the licensed Insolvency Practitioner or IP. The meeting with IP can be settled over a telephone or face to face. The meeting with the Insolvency Practitioner determines whether or not an IVA is a suitable option for resolving financial debts. Furthermore, the practitioners may also advice about the other options that can be made available to the borrowers. If the IVA services are the last option, then practitioner gathers the detailed information about the borrower's financial details. The detailed information on financial credit of the borrower includes everything such as household payments, information about any assets (including equity in his or her property), and creditors' details including their name as well as account number.

It is important for the IP to verify all the information given by his or her client. Therefore, IP gathers proof to the support that given details is reliable or correct. After verification of details, the practitioner begins to drafts the proposal. The proposal is designed in such as manner both borrower and lenders are on safer side. As a matter of fact, this proposal depicts the maximum amount the borrower can afford to pay off his credits. Later on, this proposal is signed by the borrower and presented to the lenders for their consideration.

As a matter of fact, there are multiple lenders, so they are generally given 2-3 weeks to vote on the proposals. Depending upon their concern, the lenders can accept, reject or accept with certain changes in the proposals. Once, it is accepted then it comes in the form of a legal agreement with lenders and borrowers under the presence of the Insolvency Practitioner.

An Individual Voluntary Agreement allows the borrower to freeze his or her interest payments and reduce debts on his various loans. This agreement helps the borrower to regain the certainty in his or her financial life. For many borrowers who are burdened under so many debts, this agreement or IVA is considered as way back to a debt free future. It can be said that it is a procedure where a debtor comes to an arrangement with his creditors as how their debt will be released.

The IVA services are very helpful in the worst situation such as arrears, CCJs, bad credit rating and even bankruptcy. An IVA services are considered as better alternative, especially when credit score and other credibility criteria get worse. Unlike bankruptcy, it does not publicise borrower's insolvency. This service helps the borrowers to pay off their multiple debts effectively, without much compromising on their basic needs and requirement.

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