An IVA is a legal process that helps people in financial trouble manage their debts. These arrangements can resolve many different types of debt. These debts can include bank overdrafts, credit cards, and other unsecured loans. These types of debts tend to carry high interest rates, so you should be cautious about which ones you are involved in.
Typically, an IVA will stay on your credit file for six years from the start of the agreement. This means that it can have a significant effect on your ability to access further credit. If you are trying to secure another loan, you should consider sending a copy of your IP letter to the credit reference agencies.
You will need to make a proposal to your creditors and inform them of your intent to take out an IVA. This proposal will need to be honest and transparent. In order to get an IVA to be successful, 75 percent of your creditors must agree to the termination. You must also complete the IVA for a certain period of time – normally thirty months.
The IVA process is complicated. In order to get it through, you will have to get the agreement of seventy-five percent of your creditors – ‘by value’, that is, the creditors who owe the most money. If the creditors aren’t happy with the terms of the IVA, they may haggle. They might want you to borrow more money, to include your assets in the proposal, or to make payments over a longer period.
If you are suffering from a huge amount of debts, an IVA may be the right option for you. This type of plan helps people get their finances back on track without the need for bankruptcy. It also works for homeowners who have secured loans and need to release the equity from their homes. The interest rates associated with an IVA are lower than those of an unsecured loan.
Despite the new IVA Protocol, some IVAs still have a clause that allows a secured loan. This type of clause allows the debtor to release equity from their property rather than having to remortgage. For those who are interested in this type of clause, it is important to ask whether the loan is reasonable and whether the interest rate and term of the loan are reasonable.
If you have a substantial amount of equity in your home, you should consider pursuing an equity release through an IVA. However, if you have less than PS5,000 in equity, you should consider re-mortgaging your home. If you do not, your landlord may be forced to end your tenancy if you are not able to repay the mortgage.
An IVA can be complicated if you are not careful. A loan of more than PS500 could jeopardize your IVA. It is best to discuss the options available with your IP to make sure you are not violating the terms of the IVA. If caught, you could lose your IVA or face legal action.