Introduction
Are you feeling overwhelmed by debt and considering an Individual Voluntary Arrangement (IVA)? This simple guide will help you understand what an IVA is, how it works, and whether it’s the right choice for your financial situation. With the support of Contend’s highly trained AI legal experts, you can navigate the complexities of debt management with ease. Discover your rights and options today, and let Contend provide you with the guidance you need to resolve your legal challenges.
If you’re feeling overwhelmed by debt, you might have heard about an Individual Voluntary Arrangement (IVA). But what exactly is it, and is it the right choice for you? This guide will help you understand what an IVA is, how it works, and what to consider before deciding if it’s the right solution for your financial situation.
What is an IVA?
An IVA is a formal agreement between you and your creditors to pay back a portion of your debts over a set period, usually five years. It’s a way to manage your debt and avoid bankruptcy. However, before you dive in, it’s essential to explore all your options for getting out of debt.
Key Factors to Consider
Before deciding if an IVA is suitable for you, take a moment to evaluate the following:
- Total Amount of Debt:
- Ideally, your debts should be over £10,000 and owed to at least two different creditors. If your debts are lower, an IVA might not be the best option due to higher fees.
- Monthly Disposable Income:
- You should have some extra money each month to contribute to your IVA—typically at least £100. If you don’t have enough disposable income, you may need to consider other debt relief options.
- Home Ownership:
- If you own a home, the equity in your property will be considered. If your equity exceeds £5,000, you may need to secure a loan against your home to contribute to your IVA. However, selling your home isn’t usually necessary.
- IVA Fees:
- Setting up and managing an IVA comes with fees, usually around £5,000. Some practitioners may charge fees upfront, while others will deduct them from your monthly payments. It’s wise to shop around and get quotes from different practitioners.
- Impact on Your Life:
- An IVA can affect various aspects of your life, including your savings, job, and assets. For instance, if you receive unexpected money or assets while in an IVA, you may have to share that with your creditors.
Additional Considerations
- Debts to EU Creditors: If you owe money to creditors in the EU, an IVA may not cover those debts. You could still be pursued for payment, so it’s best to seek legal advice.
- Future Income and Assets: If your financial situation improves during your IVA, you must report any changes in income or assets to your insolvency practitioner.
- Job Security: Generally, having an IVA won’t affect your job, but certain professions may have restrictions. Check your employment contract for any clauses related to insolvency.
- Credit Rating Impact: An IVA will stay on your credit report for six years, making it harder to obtain credit during that time.
Getting Help
If you’re unsure whether an IVA is right for you, consider using Contend’s legal expert chat. Their highly trained AI legal experts will work with you to provide guidance and help you understand and resolve your legal problems. They can assist you in assessing your financial situation and exploring other options, such as debt management plans or bankruptcy.
How to Apply for an IVA
If you decide an IVA is the best route, you can find information on how to apply through various resources, including government websites and debt advisory services.
Support for Debt Relief
If you’re struggling with debt, remember that help is available. You can take a survey to share your experiences and help improve support for those in debt.
For more information on finding an insolvency practitioner, visit GOV.UK.
If you have any questions or need further assistance, don’t hesitate to reach out to Contend’s legal expert chat for support. You don’t have to face this challenge alone!
For more info, check out some of our related articles:
