Reference -
Using an Individual Voluntary
Arrangement (IVA)
It is no secret that more and more consumers are finding themselves
having trouble with debt, and that many of them will end up being unable
to pay their bills. Rates of debt have been rising for a number of years
now, and with wages not keeping pace with expenses in many places around
the country that trend is only likely to rise.
Many people find themselves in the uncomfortable position of
borrowing money just to meet current living expenses like food and
clothing, and this can be further exacerbated if those funds come from
high interest sources such as credit cards. For many people who find
themselves unable to keep up with their bills, an individual voluntary
arrangement, or IVA, may be the best option for all involved.
In essence, an individual voluntary arrangement (IVA) allows a
consumer to create a plan for repaying his or her creditors. This plan
is then submitted to the creditors, and they have the ability to vote
yes or no on the proposed plan. If 75% of the consumer's creditors agree
to the individual voluntary arrangement, it is adopted. While the exact
amounts vary, the adoption of an IVA can result in a 50-95% reduction in
the amount of money that is owed. The alternative to the individual
voluntary arrangement (IVA) is generally a payment to the preferred
creditors. In such a plan, unsecured creditors generally receive no
money at all.
If 75% of the consumer's creditors are unable to agree on the
individual voluntary arrangement (IVA), any creditors whose debt amounts
to 750 pounds or more is able to apply for the bankruptcy of the
individual consumer. All these creditors are then allowed to take court
action in the county court judgement.
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