Expert Iva Advice
Real life case study #2
Janet's life was thrown into turmoil when her husband left her and her two children. He also left behind a mountain of unpaid bills, loans and credit cards as well as the mortgage.
Janet was unable to cope with her meagre income and huge debts.
She was terrified of losing her home and she feared bankruptcy.
However, after taking professional advice and being shown all her options, she decided an IVA was the best way forward.
Now, she’s paying off a greatly reduced debt by making affordable monthly payments, she’s kept her home and is getting on with her life.
“The debt counsellor assured me that there was a solution to my predicament. That turned out to be true – it was the IVA.” - Janet
A bankruptcy order can be issued by you or one or more of the people to whom you owe £750 or more.
An official receiver looks into your affairs and a trustee is appointed to take control of your finances.
The trustee’s job is to realise and distribute the bankrupt’s estate.
In other words, your assets are transferred to the trustee and these are either bought back with the help of third-party funds or sold to pay off your creditors.
The term of bankruptcy is usually one to three years, during which time the bankrupt is subject to restrictions regarding business and finances.
A Supervisor is appointed at the creditors’ meeting and it is their job to administrate the proposal
Typically, the terms of the arrangement will involve a large proportion of the total debt being written off at the end of the term of the IVA.
For the rest of the debt, a monthly fee will be paid over a five-year period.
The amount of these payments is based around your income and calculated depending on what you can afford to pay every month.
Iva Advice Information
To find out more about IVAs and for free, confidential advice on your debt problem, call the Debt Counsellors.
- Iva Report
- An IVA (Individual Voluntary Arrangement) can be an alternative to bankruptcy and could write off a large proportion of your debts.
- Facts OfIvas
The IVA was introduced under the Insolvency Act 1986 as an alternative to bankruptcy.
An IVA is often seen as preferable to bankruptcy as it doesn’t carry the same stigma and allows the debtor to continue in business without restriction.
Employers, landlords etc. are not informed if you enter into an IVA providing they are not among your creditors.
In 2005, there were over 20,000 IVAs registered in the United Kingdom.
In the third quarter of 2006, 12,228 IVAs were registered, which represented an increase of 9.8% on the previous quarter and an increase of 117.9% on the corresponding quarter of the previous year.
The advantages of an IVA are:
A large amount of money can be wiped off your debt.
An IVA ceases and prevents legal action from creditors and wipes CCJs.
An IVA will allow you to pay off your debt in monthly amounts which are calculated on the basis of what you can afford.
You can be debt-free in as little as five years with an IVA.
With an IVA you can safeguard against losing key assets such as your property.
You will not be protected from bankruptcy if you fail to keep to the terms of the IVA, eg, miss your regular payments.
The costs of the IVA will be added to your overall debt if it fails and you fall into bankruptcy.
The details of your circumstances will be entered on a public register and could affect your credit rating and chances of borrowing money in the future.
An IVA is dependent on your ability to make regular payments towards your debts, thus requiring a suitable income.
For an IVA to go ahead, your creditors have to agree to the terms. It is dependent on creditors representing 75% or more of your debt voting in favour of the proposals.