IVAs - Possibly Your Best Recourse to Bankruptcy

An IVA, or Individual Voluntary Agreement is a binding agreement between you and your creditors for repayment. It normally affords you reduced payment amounts and increased term length for repayment. It is good for you as recourse to insolvency. It is good for your creditors because they most generally would rather receive reduced, slower payments than being written off through your personal insolvency.

IVAs have a mandatory 75% cooperation minimum from your creditors; 75% of them must agree to your proposal of an IVA. The procedure is overseen by a court official known as an insolvency practitioner (IP). IVAs are normally set up on a five year basis. Interest charges are frozen at the onset of the IVA.

You petition for an IVA through the Interim Court. Once the petition is in place, your creditors cannot initiate legal action against you. There will be a creditors meeting that you will probably not attend. Your creditors will vote for or against the IVA. If only one creditor votes against it, and that creditor is owed 25% or more of your total debts, then the IVA will fail. In your support,any creditors that do not show up for the voting procedure will be assumed to be in favor of it.

The IP will regularly monitor the progress of the IVA. It is legally binding and you are required to make prompt and regular payments. The payments are meant to be manageable for you. They are based on a percentage of your earnings minus your vital expenses.IVAs are not to be confused with non-legally binding debt management plans.

IVAs are generally set for a sixty month time frame. If you consistently make your payments, you will be considered debt-free at the end of this period, regardless of the amount of your total debt that you have repaid. Do your homework and choose wisely concerning this popular recourse to personal insolvency.