4 IVA FAQ: What you want to know

If you’re facing problems to pay off your outstanding loans/debts, then you can go for an IVA (Individual Voluntary Arrangement). It will help you avoid filing a bankruptcy. IVA is a legally binding agreement wherein the creditors accept an amount less than what you to them. However, you need to be a resident of UK in order to get rid of your debts with the help of an IVA. Read on to check out some common FAQ on IVA.

1 . What are the different types of IVA?

Usually, 2 types of IVA solutions are used as an alternative to filing a bankruptcy. They are:

• Standard IVA settlement – In this type of IVA settlement, you’re required to make a fixed monthly payment for a period of 60 months and each and every creditor should receive at least 25% of what you owe to them.

• Full and final IVA settlement – If you go for this settlement, then you need to make a one-time payment that is considered to be the full and final settlement. Since you make only one payment, this type of settlement is often referred to as lump sum IVA.

While taking help of an IVA arrangement, you should know that your creditors may legitimately ask for lump sum and monthly payments.

2 . What debts can you include?

You can take help of an IVA to get rid of your unsecured debts, such as, bank overdrafts, personal loans, credit cards, outstanding VAT, etc. While taking help, you must know that you cannot include your secured debts in an IVA. In addition to this, you also cannot reduce magistrate court fees, speeding fines, rental arrears, etc. through an IVA.

3 . Can anyone take help of an IVA?

You can take help of an IVA only if you’re a resident of England, Northern Ireland or Wales. Moreover, you should owe more than £15,000 in unsecured debt and usually the Insolvency Practitioners prefer that you should owe to 3 different creditors. This is because having multiple creditors can increase the likelihood of an IVA being approved. In addition to this, you should be employed and have a regular income so that you can make the required payments.

4 . Does an IVA affect your credit rating?

An IVA may have an adverse effect on your credit rating that in turn, may decrease your score to some extent. However, the negative effect of an IVA is much less as compared to a bankruptcy. You also cannot take out additional credit when you enter an IVA but can continue using your prepaid cards.

Do you have any more questions on IVA? If yes, then you can get help from online forums. You simply need to post your queries on IVA to the forums and the experienced persons will answer them.