IVA stands for Individual Voluntary Arrangement, which is a kind of debt restructuring arrangement for individual persons on England, Wales and Northern Ireland. In Scotland, an arrangement called the Protected Trust Deed (PTD) serves in a manner similar to how IVA serves the rest of the United Kingdom.
Simply put, an IVA is used when someone is incapable of paying off their debts to lenders in due time. This debt cannot be smaller than £15,000, so one cannot use IVA for trivial debts. However, for debts larger than that, anyone can use this arrangement if they have trouble with paying back their loans. In the following sections we find out is an IVA right for you?
Eligibility for IVA
To be eligible for an IVA, you need to be an individual, which excludes businesses from using this arrangement. You also need to be an individual who is currently employed, so if you are presently unemployed, you may not opt for an IVA. An IVA is used to restructure large debts, of size larger than £15,000, if you need help with smaller debt, such as with your grocer, than an IVA may not be the right option for you.
IVA is for Unsecured Loans
IVA is a plan for loans that are unsecured. These include loans like credit card loans, but exclude loans like your home mortgage, which is secured against your home. Therefore, if you have problem paying your secured loans, then an IVA is not the solution for you. However, it can still help you if you are also having trouble with unsecured loans. In such a situation, you can get an IVA for your unsecured loans, which will free your money that you can use to pay back your secured loans.
Under IVA, your obligations as a borrower are not reduced. Rather, you are just given more time to pay back your debt. Normally, a debtor is given up to five years to pay back their debt to all the lenders. However, the term can be made longer depending on how much one can pay back every month. It should be noted that failure to make the payments under IVA can lead to bankruptcy, which is not something that anyone would like. Therefore, one should commit to an IVA only when they are sure that they can make their monthly payments agreed upon under it.
An IVA is a financial arrangement applicable in UK, which helps individuals pay back their debt without being declared bankrupt. If you meet its eligibility, and find the above conditions to your liking, then you should definitely use the IVA to repay your debts in full.