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Debt Negotiation Guide:
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How An IVA Proposal Works And How To Apply
Go Straight To Recommended IVA Providers
Residents of Scotland Should Refer To The
Protected Trust Deeds Page
See Also IVA Questions For Quick Answers to IVA FAQs, and
Read About The Disadvantages Of An IVA
IVA Proposal - How To Get An IVA Proposal
An IVA proposal is a form of debt solution that is only available in the UK. In fact it is only an option for residents of England, Wales and Northern Ireland. Residents of Scotland can get help through the Scottish equivalent to an IVA, which is a Protected Trust Deed. IVA stands for Individual Voluntary Arrangement, and it is a legally binding agreement with your creditors about contributions you will make in settlement of your debts.
Getting an IVA proposal is not as easy as just deciding you would like one and applying. These proposals are designed to address serious circumstances caused by substantial debt. They are legal agreements that can only be set up by Insolvency Practitioners, who are usually solicitors or accountants. Before an IVA proposal is made an experienced advisor will need to go through your financial situation in some detail and then make recommendations on whether an IVA is an appropriate way forward.
Even if you are not eligible for an individual voluntary arrangement, a good debt company may well be able to offer you an alternative solution that is more suitable for your circumstances. It is useful to have a reasonable understanding of how an IVA works and what situations it is suitable for before you apply to a debt company.
What Does An IVA Proposal Do?
An IVA proposal will allow you to make regular monthly contributions towards your debts through a single affordable payment to an IVA specialist. This carries on for the duration of the arrangement, which is normally five years, and at the end of that period any debts that remain unpaid are written off. This is a crucial aspect of these arrangements, as in some cases this can mean writing off up to 75% of your debts. This is how an IVA can leave you debt free even if you can not afford to repay what you owe.
This is an important difference between this proposal and a debt management plan. Under a debt management plan you do eventually repay all the money you owe in full, whereas an IVA is specifically designed for situations where this is not possible.
Another difference between debt management and an individual voluntary arrangement is that a debt management plan is an informal agreement that you can get out of if your situation changes. With an IVA proposal you are tied into the agreement and it cannot be undone easily. There are also advantages to the proposal being a formal arrangement. The main one being that if 75% of your creditors agree to it, the remaining 25% have no option but to be part of it too, even if they object. The percentages relate to the monetary value of the debt, rather than the number of companies you owe money to.
IVA Proposal - Are You Eligible?
While the idea of having your debts written off can be very attractive, you are unlikely to be considered for an IVA if you have enough money coming in to actually repay your debt properly. You cannot opt for an IVA proposal just to get out of repaying your debts. Your finances will be examined and if your creditors think you could actually afford to repay them they are not likely to agree to a proposal that will leave them out of pocket.
You may wonder why creditors should ever agree to a proposal that leaves them with less than they are owed, but it can actually be the best thing for them too in some situations. If you have a really serious amount of debt and not much income, there is a real danger that you will go bankrupt and the creditors may get only a tiny fraction of what they are owed, or even nothing. If the creditor understands the seriousness of your situation and sees that ending up with nothing is one possibility, they are likely to agree to a deal that at least gives them some of their money back.
IVA Proposal - How To Get One
There are plenty of specialist companies that can provide an IVA for you, but you should shop around to make sure you get the best proposal. It is easy to apply online to a few good companies, after which they will contact you to talk about your situation and how they can help you.
One of the safest ways to approach it is to apply to a few companies that are known to be highly reputable and effective. You can find a list of recommended IVA specialists on the main Individual Voluntary Arrangement page of this website, so just apply to two or three and compare the proposals you get back:
Go To The List Of Recommended IVA Providers
