An IVA can be used to clear a wide range of debts. A person can include as many debts as they wish in the plan, though it is typically best for people with debts from three or more lenders. Any additional debts must be repaid with an ability to make repayments, though.
An IVA requires the approval of 75% of the creditors, known as the ‘by value’ creditors. This means that all creditors who owe the debt must vote in order for the IVA proposal to be approved. The creditor will likely refuse if the debtor does not meet the 75% requirement. However, if an IP can prove that they are putting in the effort to make repayments, and have some disposable income, the IVA is most likely to be approved.
If your share of equity is at least PS5,000, you may be eligible to enter an equity release scheme. This involves taking out a secured loan or remortgaging your home. The amount you borrow must be at least 15% of the value of your home. The new mortgage must be paid off by the time you reach state pension age. A successful equity release scheme can reduce the length of the IVA to five years.
Obtaining credit after an IVA can be difficult. However, there are now a variety of IVA options that allow you to secure a loan and pay it off over time. These options are especially useful for self-employed borrowers. You can also make overpayments and take payment holidays as part of your repayment plan.
An IVA can be a good solution if you are overdrawn with debts. However, it is important to understand that you must have a basic bank account separate from all your debts. Some banks do not allow you to operate a basic bank account during your IVA. You should therefore do your research before hiring a creditor.
To qualify for an IVA, you must have a mortgage that is at least 85% of the market value of your home. You must also be able to retain at least 15% equity in your home. Many lenders do not offer unsecured loans for this purpose, so it is important to be realistic about your ability to repay the loan. Your IVA supervisor will be able to advise you on the maximum amount of money a reputable lender is willing to lend and the amount you can afford to pay.
It is also important to understand that having an IVA on your credit history may hinder your ability to find a reputable lender. Your credit score may suffer from the credit damage and you may have trouble securing a good rate of interest. This can make it difficult to get credit again, so you should seek advice from a credit adviser or IP.