An IVA is a debt management solution that consolidates all of your debts into one monthly payment. It freezes your interest for the period of the IVA and allows you to pay back creditors at an affordable rate each month. The IVA Is set up using an insolvency practitioner; they take on all of the responsibility in paying and dealing with communication from your creditors. You are only required to pay them one set amount each month. However, creditors must agree to an IVA, and there is no guarantee that they will comply. After the IVA has ended, the remainder of the debt is written off, and you will not be required to pay this back.
The process of setting up an IVA goes through all of your finances and creditors to identify exactly how much debt you have and what that debt consists of; some debts cannot be paid back using an IVA. The debt you have that can be included in the IVA must meet the requirements for the insolvency practitioner to proceed with the IVA proposal. The insolvency practitioner will then look at your personal finances to see how much you can realistically pay back each month without falling behind. Once the insolvency practitioner has this information, they will put together a proposal and hold a meeting with your creditors. They will discuss the IVA and ask your creditors to agree to the terms set out by the insolvency practitioner. If everything is approved, you will only need to speak to your insolvency practitioner and pay back the agreed monthly payment, which will be divided up and sent to your creditors. If anything changes in your personal circumstances, you must immediately inform your insolvency practitioner, who will recalculate and get in touch with your creditors again if the agreement needs to be changed.
How much does an IVA cost? An IVA isn’t free to set up, as with many debt management solutions, there is a cost involved with an IVA. The price depends on the insolvency practitioner; each practitioner has their own set of fees added to the total you owe your creditors. The good thing about most IVAs is you will only need to pay a single monthly payment; the fees for the IVA will be taken out of this monthly charge before your creditors are paid back. However, some IVAs require an upfront deposit or sum of money before setting up. If you decide that an IVA would be a good solution for your debt issue, you can ask several providers for quotes and information on their services. Some IVA providers will agree to a free consultation where they will explain the whole process and how they can help you manage your debt, getting you to a place where you can be debt-free.
Debt can affect everyone; there are several unexpected situations which lead to large amounts of debt. If you lose your job, you may not be able to pay your expenses, leading to additional loans to cover the shortfall. This is a very difficult situation to escape without somehow finding more income or coming into a lump sum of money. Payday loans are advertised as a way to get money quickly until your next payday. However, the amount of interest on a payday loan is substantial; if you are unable to pay back the loan quickly, the interest rate can result in thousands of pounds worth of debt in just a few weeks. Everyone can fall into the trap of lending money and then being unable to pay it back, no matter their job or situation.
No matter how much debt you have, there is a solution to help you manage that debt and get back on your feet. An IVA is one solution to debt; there are, however, many other ways to manage your debt, depending on your circumstances. Trained debt advisors can help you impartially work out the best solution for your debt, taking into account your regular payments and your working situation. If you’re worried about your debt, get in touch with a trained debt advisor for more information or support in taking the next step.