Ms E went through a divorce over five years ago now. Ms E now lives with her grown up kids in a rented house through her local authority. She has debt outstanding at approx £40,000. Her debts are two loans and a couple of credit cards.
After the divorce there was only her income and Child Support payments from her ex husband. As the kids are now 18 she does not receive any child support anymore and is struggling to pay her creditors. She has robbed Peter to pay Paul but is now at limits on both credit cards.
Ms E recently sought advice and called Debt Support Trust for financial help. After looking at all avenues Ms E has decided to enter an IVA.
The nominee looking after her case has sent out the proposal to Ms E and also to her creditors. Ms E has a disposable income of £300 per month. The monthly contractual payments for debt add up to £920 per month.
The meeting of the creditors has taken place and the vote went in favour of the IVA to go ahead meaning that in five years Ms E can look forward to a new beginning. Ms E will pay £300 per month into her IVA and will pay so much back to the creditors and at the end the rest will be legally written off. All interest and charges will be frozen. (Unless the IVA terms are not met then these can be added back on).
Ms E can now see light at the end of the tunnel and has no assets that the supervisor will look at so has now peace of mind.
Showing posts with label Individual voluntary agreement. Show all posts
Showing posts with label Individual voluntary agreement. Show all posts
Monday, 16 May 2011
Tuesday, 10 May 2011
The Individual Voluntary Arrangement (IVA)
An IVA is the Equivalent of a Protected Trust Deed but is only available in England, Wales and Northern Ireland. IVA's have helped thousands of people who face severe financial problems.
Ms E had went through a divorce over five years ago and lived with her grown up kids in a rented house through her local authority. She had debt outstanding at approx £40,000. Her debts were two loans and a couple of credit cards.
After the divorce there was only her income and Child Support payments from her ex husband. As the kids were 18 she didn't receive any child support and was struggling to pay her creditors. She was robbing Peter to pay Paul and had reached her limits on both credit cards.
After looking at all avenues Ms E has decided to enter an IVA.
The nominee looking after her case had sent out the proposal to Ms E and also to her creditors. Ms E had a disposable income of £300 per month. The monthly contractual payments for debt added up to £920 per month.
The meeting of the creditors took place and the vote went in favour of the IVA to go ahead meaning that in five years Ms E could look forward to a new beginning. Ms E now pays £300 per month into her IVA and will pay this until the IVA is complete at the end the rest will be legally written off. All interest and charges were frozen. (Unless the IVA terms are not met then these can be added back on).
Ms E could now see light at the end of the tunnel and had no assets that the supervisor would consider liquidating so she now had peace of mind.
To be suitable for an IVA you would need to meet the following criteria;
- Unsecured debt must be £12,500 or over
- You must have a monthly disposable income of £200 or greater
- You must live in England, Wales or Northern Ireland
- You must be in full time employment
Benefits Of An IVA
Your IVA would be legally binding meaning no further charges or interest could be added. It also means your creditors are not able to change their mind if they agree to your proposal
You will only be asked to make affordable repayments
An IVA enables a professional person (doctor, accountant, solicitor etc) to continue to practice whilst resolving their debt problem
Bankruptcy may affect their professional status. You may have to check your employment contract to ensure you can enter an IVA
You are likely to be able to keep your home within an IVA, usually
the Insolvency Practitioner will only be interested in any equity
You would face fewer credit restrictions entering an IVA compared to bankruptcy
Negatives Of An IVA
Any available equity in your house or other asset would have to be released for your creditors
An IVA is legally binding so defaulting on the agreement would result in your IVA failing, which could mean your creditors will proceed with bankruptcy
Your income and expenditure will be reviewed on a frequent basis which can mean your monthly contribution could fluctuate up as well as down
Your IVA would be noted within your credit file and it would remain there until you complete the IVA, and for a year after that
An IVA usually lasts for 5 years, whereas Bankruptcy would only last for 1 year
Ms E had went through a divorce over five years ago and lived with her grown up kids in a rented house through her local authority. She had debt outstanding at approx £40,000. Her debts were two loans and a couple of credit cards.
After the divorce there was only her income and Child Support payments from her ex husband. As the kids were 18 she didn't receive any child support and was struggling to pay her creditors. She was robbing Peter to pay Paul and had reached her limits on both credit cards.
After looking at all avenues Ms E has decided to enter an IVA.
The nominee looking after her case had sent out the proposal to Ms E and also to her creditors. Ms E had a disposable income of £300 per month. The monthly contractual payments for debt added up to £920 per month.
The meeting of the creditors took place and the vote went in favour of the IVA to go ahead meaning that in five years Ms E could look forward to a new beginning. Ms E now pays £300 per month into her IVA and will pay this until the IVA is complete at the end the rest will be legally written off. All interest and charges were frozen. (Unless the IVA terms are not met then these can be added back on).
Ms E could now see light at the end of the tunnel and had no assets that the supervisor would consider liquidating so she now had peace of mind.
To be suitable for an IVA you would need to meet the following criteria;
- Unsecured debt must be £12,500 or over
- You must have a monthly disposable income of £200 or greater
- You must live in England, Wales or Northern Ireland
- You must be in full time employment
Benefits Of An IVA
Your IVA would be legally binding meaning no further charges or interest could be added. It also means your creditors are not able to change their mind if they agree to your proposal
You will only be asked to make affordable repayments
An IVA enables a professional person (doctor, accountant, solicitor etc) to continue to practice whilst resolving their debt problem
Bankruptcy may affect their professional status. You may have to check your employment contract to ensure you can enter an IVA
You are likely to be able to keep your home within an IVA, usually
the Insolvency Practitioner will only be interested in any equity
You would face fewer credit restrictions entering an IVA compared to bankruptcy
Negatives Of An IVA
Any available equity in your house or other asset would have to be released for your creditors
An IVA is legally binding so defaulting on the agreement would result in your IVA failing, which could mean your creditors will proceed with bankruptcy
Your income and expenditure will be reviewed on a frequent basis which can mean your monthly contribution could fluctuate up as well as down
Your IVA would be noted within your credit file and it would remain there until you complete the IVA, and for a year after that
An IVA usually lasts for 5 years, whereas Bankruptcy would only last for 1 year
Debt Help and Support - IVA
While IVA's have been increasing most people are still unaware of what this debt solution has to offer and how it can benefit them. In this article we will discuss what an IVA is and how it can help those facing financial problems.
IVA's were created to help people pay back a portion of their debt and to stop people from having to declare themselves bankrupt. IVA stands for Individual Voluntary Arrangement, this is a formal debt solution which is legally binding once it begins. Creditors like IVA's because they generally receive more of they are owed than if the person in debt were to file for bankruptcy. Debtors like IVA's because it doesn't have as a severe effect on a persons life i.e they are able to keep their house, the payments are more manageable and while their credit rating is badly affected it isn't as bad as it would be with bankruptcy.
Only qualified professionals can administer an IVA. This is usually an insolvency practitioner but there are a number debt advice charities who can offer debt advice which would not cost anything to those requesting help. These debt advice charities can help to package an IVA for the debtor. Once a person has spoke to a debt advice charity they will be taken through an income and expenditure. This will show how much money the debtor has left each money to pay towards creditors after all expenditure is taken from the income. Which will help to ascertain just wither or not they are suitable of an IVA. If advised that an IVA is the best debt solution then the debt advice charity would pass all the case to an Insolvency Practitioner (I.P). All these details are put to your creditors along with a proposed monthly payment.
If a person owns their own property, then any equity they have available in their house will be included into the IVA proposal as part of the repayment offer. The insolvency practitioner will require a person to release any equity before putting an offer forward. This will then be put into the IVA fund which is offered to the creditors. If the property is jointly owned then only the debtors share of equity is normally considered under the IVA.
For the IVA to be accepted then more than 75% by value of unsecured creditors vote in favour of the IVA then it has to be accepted by all the unsecured creditors. If a person has 4 creditors and one of them is owed 76% of the total amount in unsecured debts then they will have the their vote would be the one that counted the most. So if they refused the whole IVA would be rejected and if they accepted then the IVA could begin, this would mean that it didn't matter what the other 3 creditors voted.
If the IVA is rejected then there is still chance for the debtor. This is because they do have an opportunity to re-submit an improved IVA proposal. If this is not an option, due to funds or other demands then it is best to go back and speak with the debt advice charity again and they can help to find another solution. It maybe that they will help setup an informal debt management plan. It is strongly advised that no IVA payments are missed but in most cases this will be understood and possibly written into the agreement. The IVA is a legally binding agreement. If payments are missed then there is a risk that the trustee can force bankruptcy. If a persons personal circumstances change then an IVA can be altered to reflect this as they can be flexible depending on the circumstances.
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