IVAs are not a new phenomenon as they were recognised in law as an alternative to bankruptcy as long ago as 1986 in The Insolvency Act.
Many people have benefitted from an IVA and the mainstream banks and lenders understand the process and are happy to work with their customers to resolve their financial difficulties. In fact, under an initiative lead by the British Bankers Association an IVA Protocol has been developed which sets out the parameters necessary for an IVA to be accepted.
Provided that an IVA proposal is sensible and reasonable, creditors will accept any such proposal and upon acceptance all creditors are bound to its terms.
An IVA will:
- Grant debt forgiveness (as much as 70% of debt may be written off in some circumstances)
- Crystallise the debt on acceptance as interest and charges are frozen
- Protect the matrimonial home
- Allow a debtor to be debt free in 5 years
- Effectively “wipe the slate clean”
- Provide peace of mind that the problem is being resolved and is not worsening
- Avoid the stigma of bankruptcy
- Be administered and run by a licensed Insolvency Practitioner
As with a Debt Management Plan the amount which is calculated as being repayable will be based on the amount a person can afford having paid secured creditors ( e.g. mortgage, second charge loans, hp) and having made allowance for reasonable living expenses.
Our staff will be able to assist in preparing an Income and Expenditure account and determining whether you qualify for an IVA. A fact finding fee typically equivalent to the first monthly contribution is charged which is fully refundable should the IVA proposal not be accepted by the creditors.
On acceptance, creditors are bound under the provisions of The Insolvency Act to the terms of the IVA and are not subsequently allowed to continue or commence any legal action to recover the debt provided the monthly payments are maintained.Payment is made by direct debit into a separately nominated estate account from which dividends are paid to the creditors. There’s no need for you to contact your creditors or make payments, as this is all dealt with on your behalf.