Iva Information: an Apt Way to Evade Bankruptcy

By: Achala Afreen
Government introduced individual voluntary arrangements for the people who are on the edge of filling bankruptcy. It was introduced by the Insolvency Act of 1986 as the alternative option to bankruptcy.

An IVA is a legal contract between the debtor and the creditor. Unlike bankruptcy, IVA does not force restrictions and once all the payments are paid, the debtor is free of debts. This continues for 5 years usually. The insolvency practitioners take the responsibility on the debtor's behalf to pay the creditors. It becomes practitioner's duty to help the debtors to clear all the debts.

As the debts of the debtors are not same every time, the way to clear the debts is not similar either. In Lump amount, the debtor pay the huge amount at one go and the remaining debt is cut off. The other way is to pay monthly payments. The debtors have to pay monthly payments and the practitioners divide these to all the creditors over the period of 5 years. In loan consolidation one big loan is taken and all the previous debts are repaid. Then the borrower has to pay only one payment each month to a lender.

IVA has many advantages. Only agreed amount is needed to pay by the debtor. Your creditor cann0ot bother you as it will need the permission of the court. All these are kept private so that your professional and social life does not get hampered. Interest rate is frozen and no more charges are charged by the creditors.

To avail the advantages of IVA there are some criteria. You should be an adult and minimum debt should be ?15000. You should be able to repay 30% of your debt. Number of creditors should be 3 or 4. Minimum monthly income needed is ?200.

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