This option is regularly in the news. Until recently it was a little known procedure but was actually introduced as part of the Insolvency Act 1986 as an alternative to Bankruptcy. Simply, an IVA is a private agreement between you and your Creditors to repay a percentage of your debt over an agreed term. The agreement is put together by a licenced Insolvency Practioner whom you nominate to act on your behalf. The document is ratified by the Court and circulated to your creditors.
An IVA does not convey the stigma that some associate with Bankruptcy mainly because information is not released into the public domain, meaning the impact on your reputation can be controlled. Essentially what makes this so attractive is that your affairs are kept private, you avoid Bankruptcy and once the terms are agreed the creditors can’t change their minds. In addition, interest is frozen and the outstanding debt at the end of an IVA is written off (up to 75% of your total debts).
What to do if you are facing financial problems
Remember golden rule number one – don’t ignore the problem. Contact one of the Debt Advisors in the Insolvency Department at Farleys for free independent and impartial advice on how to deal with your debt problems. We will talk through your financial situation and speak to you about the best options for your particular circumstances.
Seeking help for your debt problems is often the most difficult but by far and away the most important step you can take to resolving your problems.
Some quick info about IVAs:
- This is a legally binding contract between you and your creditors
- You make monthly payments over a set period (usually 5 years)
- Up to 75% of your debt is written off
- Interest is frozen
- There is no creditor pressure during the term of the IVA
- Following completion of the IVA you are debt free.