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If you are in serious
debt then you are not alone. More and more people in the UK are suffering from
debt. This is why solutions such as IVA and debt consolidation are becoming more and more popular in
addressing the debt issue.
So what is IVA?
An IVA or Individual
voluntary arrangement, allows a debtor to ward off becoming bankrupt by coming
to an arrangement with his creditors to pay off an amount of his debts over a
given period.
An IVA is basically
a negotiated agreement between the person
in debt, his insolvency practitioner and the people who the debtor owes money
to. Usually this agreement involves th debtor paying a lump sum straight away
to the creditors and the insolvency practitioner, then a number of monthly
payments.
How much is
repayed each month is based on the debtor’s income and outgoings. The repayment
programme is a legally binding contract. If the debtor does not keep to the
contract then the creditors will/may force the debtor into bankruptcy. If the
majority of creditors do not agree to the IVA programme then it can not go
ahead.
So what are the benefits for the Debtors?
Avoiding the stigma of bankuptcy
Severe penalties
Risk to future career prospect
It’s a way to reduce the amount that you pay back
It stops any further interest charges
It will reduce your monthly repayments
The IVA is an tremendously powerful tool
enabling debtors to clear their debt and return to a clean financial bill of
health.
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