Debt and Debt Relief

Over the past decade banks made it easy than ever before for people to get access to loans and credit. This has unfortunately meant that more and more people have succumbed to ever increasing debt. Individual voluntary arrangements were set up in the 1980s as a way for people and businesses to work their way out of serious debt and avoid bankruptcy. An IVA is an agreement that an individual makes with their creditor(s) as a way of avoiding bankruptcy. The individual will negotiate with the creditor(s) either a monthly payment over the course of up to five years, or a lump sum from the sale of goods or the remortgage of property. The creditor(s), for their part of the arrangement, would then write off the remainder of your debt. The reason so many people are setting up IVAs every year is down to the huge benefits that can be had if you are finding it difficult paying back your debts. Once you enter into an agreement, all interest and late payment charges are frozen for the duration of the agreement, plus you are unable to be taken to court by your creditors and once the full amount of the debt is received by your creditors, your credit rating will improve. If you are looking at possibly bankruptcy due to large debts from credit cards, overdrafts, personal and business loans, store cards and catalogue negative balances then an IVA could be your best option for continued solvency. As long as you can either afford a single lump sum or monthly payments of a minimum of $300, then you may be able to reduce your debt by up to 75%. In order to set up an IVA, an insolvency practitioner must propose the agreement to your creditors; you are not able to propose it yourself. The charges that these insolvency practitioners charge you will vary, but most will take their fees from your monthly payments. It is always good practice to shop around for recommended insolvency practitioners as if up front payments are made and the agreement falls through then you have wasted money you have not got. To qualify for an IVA you will need to have a minimum of around $20,000 debt. Also, 75% of your creditors (in monetary terms) must agree to the terms and repayment scheme of the IVA. So long as 75% agree, those who do not agree will be legally bound to accept it. However, if less than 75% agree, the IVA will fail. If that happens then you can change the terms of the IVA and try again, though this will involve paying more fees to your practictioner.

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