We are sometimes placed in a really tough financial situation which may be brought about by our own doing such as making bad financial decisions or it may be due to a bad global economy where the flow of cash is not at its best. Either way, when we are facing a financial crisis, we also face the risk of losing our assets and even getting laid off our work and we resort to making debts which eventually pile up.
To prevent facing bankruptcy, many people apply for individual voluntary arrangement instead. What is an IVA and how does IVA work, are all questions which we will try to answer in this article.
What Does IVA Stand For
An IVA or Individual Voluntary Arrangement is usually filed by an individual who is facing business insolvencies but does not want to file for bankruptcy. An individual voluntary arrangement is similar to a debt loan, where an applicant applies for the scheme with creditors and through a formal and legal agreement, stipulates payment systems which are based upon a debtor’s capacity to pay.
Many financial experts advise individuals with large outstanding debts to apply for IVA instead for filing for bankruptcy especially if they own a lot of valuable assets. By definition, IVAS are supposed only to cover up for business insolvencies. However, recent trends in countries like those in the United Kingdom, are seeing IVA applicants who want to settle their personal insolvency.
Typically, people who want to pay for their personal bankruptcies start with small debts which pile up and become involved in delayed payments, especially since the interest rates for these debts also cover up for tax. Payment period usually varies, and most probably these schemes are based on the capability of the individual to pay for the equity, given his or her current financial situation.
Advantages and Disadvantages
While applying for an IVA seems like a good idea, there are also IVA pros and cons that come along with these promises. The pros and cons of individual voluntary arrangement mainly revolve around the debts that it can cover, depending on the methods. Some of these debts include:
1. Credit Cards
2. Card Bills
3. Bank and Personal Loans
4. tax debts
5. Electricity and Gas Bills
6. Secure Loans and Mortgages
While those are the loans which an IVA can cover, there are also some which it doesn’t, depending on advice given by the creditors. IVA excludes:
1. Student Loans
2. Child Support
3. Court Fees and other fees ordered by the court
As you can see, the number of insolvencies that an IVA can cover is more than those that it can’t.
If you are considering applying for an IVA, you can check out reliable creditors like Creditfix – individual voluntary arrangement to help you with your debts. As mentioned, IVA can help you deal with your economic crisis gracefully, without having to give up a lot of your assets. Depending on the agreement with the creditors, an IVA can help you pay for a variety of loans and it might be wise to apply for one before your time and money runs out.