‘Apply for an IVA’ is a serious online debt query made by UK residents looking for the best debt solution. Here’s how an IVA may ease your debt worries and give you mental peace.
If you want to apply for an IVA in the United Kingdom, then things are serious with you financially. You are deep in debt and worried about your family’s future and how you will take care of them. You have even thought about taking the bankruptcy route if your circumstances don’t improve soon enough. Interestingly, IVA could be a route to avoid bankruptcy.
Being in Serious Debt & Want to Apply For an IVA
First of all, what is an Individual Voluntary Arrangement, or IVA? It is an insolvency arrangement designed to help people in debt get out of debt and be stress-free about the future. It becomes quite stressful if you can’t pay your bills and are struggling financially, or you need to pay back creditors, such as credit card companies, loan companies, priority bills and debt collectors. It can seem like there’s no light at the end of the tunnel without an IVA.
An IVA is a formal legal process that allows you to make a legally binding arrangement with your creditors to be debt-free. Creditors are more likely to agree to an IVA as it is cheaper than taking you through bankruptcy. An IVA helps protect your assets like your car or house — making it harder for a creditor or Court to take everything away from you if things go wrong.
Is there any alternative?
An IVA is a way of settling your debts that allows you to pay back what you owe over five years. It’s similar to bankruptcy but doesn’t affect your credit rating, meaning it could be a good debt solution for anyone who wants to keep their finances under control.
That said, not everyone is suited to going down this route. Before you apply for an IVA, you must consider all other debt solutions carefully. You may find better ways out of debt than applying for an IVA. If you can, speak with a qualified debt advisor who can help determine which debt solution works best in your unique situation.
How do I apply for an IVA?
It can be challenging to see a way out when managing a debt load. An IVA is a formal and legally binding agreement between the debtor and his creditors to pay back debts over a period of time. It is approved by the court and helps in mitigating any long-term problems you may have as a debtor when it comes to qualifying for mortgages or other loans.
If you live in England or Wales, it’s best to contact an experienced debt help service or trusted debt advisers. They can give you advice on avoiding entering into severe debt and information on how much IVAs cost. You can apply for an IVA after consulting with them.
Secured Vs Unsecured Debts
Any debt has several characteristics, which categorize it into one of two types – secured or unsecured. Secured debts are backed by property that can be used as collateral, such as a house or car. If you fall behind on your debt payments, your creditor can repossess your assets until you repay what you owe.
Unsecured Debts
The IVA debt solution can only take care of all your unsecured debts. What are some examples of unsecured debts?
- Payday Loans: Quick, short-term, high-interest loans up to £1000 received the same day
- Bank Overdrafts: Cash advances to assist with monthly cash flow
- Credit Cards: Full range of credit cards fall into this category
- Store Cards: Cards enabling purchases to be credited from a chain of shops
- Catalogue Accounts: Buy now – pay later via mail order
- Repossessed property shortfalls
- Repossessed car finance shortfalls
- Furniture Credit: Buy now – pay later furniture stores
- Electrical Goods Credit: Like laptops, computers or TVs
- Overpaid Benefits: Child Tax Credits paid in error
- Unpaid Income Tax: Outstanding income tax
- Unpaid Utility Bills: From previous addresses
- Unpaid Council Tax: Any outstanding council tax including the current financial year
- Unpaid Mobile Phone Contracts: Where the phone is no longer being used
- CCJ debt: Where the debt has gone into County Court Judgement
How much you will pay under an IVA
An IVA is a personal insolvency solution available in England, Wales and Northern Ireland. An IVA is designed to resolve your debts via a structured, affordable monthly payment plan over a period not exceeding five years. Before entering into an IVA, you must understand how much you will pay under an individual voluntary arrangement — ideally by speaking with experts about your situation.
Once you speak with knowledgeable debt advisers, you might realize that if your IVA gets approved, you could pay far less than you had calculated or imagined.
IVA Savings example
For example, your total debt is £10,000, and your monthly debt payment is coming to £650. After income and expense calculations with your debt adviser, you realize that your total monthly disposable income is just £100 that you can spare. Here, if your creditors agree to your payment of £100 monthly if you enter into an IVA, then for the next five years, you end up paying £6000 After five years, as per IVA terms, the remaining debt that is left is written off!
In other words, your debt adviser will tell you that you saved £4000 with the IVA solution. Of course, there are strict terms & conditions for entering into a successful IVA, but you get the idea now.
The Pros and Cons of Apply For An IVA
An Individual Voluntary Arrangement (IVA) is a debt solution available only to those living in England, Wales and Northern Ireland. An IVA allows you to get out of debt, but it comes with restrictions. You’ll have a set time frame within which you must pay back your creditors. However, if you miss payments—or fail to make them on time—the Court has powers that allow it to sell your assets. To put it simply, there are pros and cons associated with IVAs.
An IVA can help you from financial ruin by providing a structured way to pay back your creditors over an agreed period. This will allow you to have a fresh start and live without the burden of debt.
The IVA process allows you to keep all your assets, unlike bankruptcy. It also protects from creditor harassment and the risk of being prosecuted for bankruptcy offences.
