Debt Free Within 5 Years Or Less? Is an IVA Too Good to Be True?
The answer to the question ‘Is an IVA too good to be true?’ all depends on one thing - you.
It is the individual circumstances of the debtor, not the IVA which really decides whether a person can be helped with an IVA.
An IVA is indeed a fantastic alternative to bankruptcy and a great opportunity to get back on track for those who are lucky enough to fit the criteria to be accepted for one.
The main advantages to an Individual Voluntary arrangement are;
Creditors have to consider your proposal for payment by law
Interest and charges will be stopped
You will pay only one single monthly payment
Creditors will no longer call you - they will deal directly with the Insolvency Practitioner
Up to 60% can be written off your total debts
You will become debt free within 5 years or less as part of the agreement
An IVA does require you to be able to commit to one regular monthly payment which is to be divided out to all your creditors equally by the insolvency practitioner. For this reason, it is required that you are in employment and have some spare cash (at least ?00 minimum) available to pay to the IP each month. This may seem daunting, but consider how much you currently pay in debt repayments, possibly just in minimum repayments which go little or no way towards allowing you to become debt free. All this just to keep the bailiffs from your door. Now imagine how much better it would be to actually make that same payment (maybe a little less, or maybe a little more) but this time every penny goes towards paying your debt off - your interest is stopped in an IVA, so you are not climbing a constant up hill battle to make payments to creditors which just get eaten up by interest each month.
Whilst this is a clear advantage to an IVA, another one is the fact that you can actually write up to 60% off your total debt. The IP will negotiate this for you via an IVA proposal to your creditors, and the great thing is they are legally obliged to listen and try to help you. As this is a formal agreement, the interest CAN be frozen, the bankruptcy CAN be stopped and yes - you CAN be debt free within 5 years or less.
So what’s the catch? I hear you say…
Well like I said, you must fit the criteria, which basically means you must;
Be in employment
Owe a minimum of ?5,000
Your debt must be owed to a minimum of 3 creditors
Have a spare ?00 per month to pay to your creditors. (Remembering your current debt payments will be eliminated and replaced with this cost)
So is an IVA too good to be true? No, not if you fit the bill to be eligible for one. Given the choice of bankruptcy or an Individual Voluntary Arrangement, most people would opt wisely for an IVA every time. I firmly believe that it is a valuable lifeline to those who really don’t want their name dragged through the mud by Bankruptcy and then be forced to live the consequences of it for years to come.
Sally Slater operates http://www.westopdebt.co.uk - a national site giving free help and advice on all debt problems faced by residents of the UK. Visitors to the site will be able to compare the pro’s and con’s of all debt solutions available via the helpful chart located at http://www.westopdebt.co.uk/comparison_chart.html and are also able to request further information or apply online for a whole range of services including IVA’s, Debt Management Plans, Consolidation Loans, Payday Loans and Poor Credit Re-mortgages
Article Author :Sally_Slater
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