Monday, April 14, 2008

Individual Voluntary Arrangement (IVA)

IVA was first introduced into the English Law as a part of The Insolvency Act 1986. This law is applicable in England, Wales and Northern Ireland but specifically excluding Scotland which has its own form of IVA legislation. The new IVA legislation came into picture when majority of people were falling into the overwhelming debt problems. Before this legislation came into picture, consumers had no option but to seek the protection of the court by petitioning for bankruptcy.
When the number of people filing for bankruptcy was increasingly getting higher, the government was becoming more concerned because it’s usually a lose-lose situation for all the parties involved.
The consumer filing for bankruptcy had to lose all his major assets including his family home.
The creditors get nothing recovered from the debtor once he qualifies in bankruptcy.
There was a social and future employability stigma associated with bankruptcy providing future earnings impact for the bankrupt.
Under this legislation, when the consumer is taking debt advice from an IVA, he can request the creditors to restructure his overwhelming debts and if this is not done, the only left alternative is to file for bankruptcy.
  • The basic elements of IVA are:
All the unsecured debts can be consolidated together into one new IVA contract
There is one single IVA monthly payment made to all creditors.
The new IVA contract can last up to a maximum period of 60 months.
Once the IVA term is over, the remaining debts will be written off by the creditors.
All interests and charges have to automatically stop in the IVA contract.
Creditors are not allowed to file any legal actions against the consumer if he is making regular payments through IVA.
Any increase or decrease in the property value may need to be paid into the IVA,
Debt advice through IVA has become increasingly popular in the recent years because people are hit with huge amount of unsecured credit and they can make payment arrangements with their creditors through this legislation without going bankrupt.

0 Comments:

Post a Comment

Subscribe to Post Comments [Atom]

<< Home