What is an IVA?
An Individual Voluntary Arrangement (IVA) is a formal legally-binding agreement that helps a person with large unsecured debts, who is unable to afford their contracted monthly repayments, reach a new agreement with their creditors.
An IVA normally consist of 60 monthly repayments, calculated by establishing what you can actually afford to repay, once all your essential living costs have been taken into account, and will replace the original agreed monthly payments for the original debts. Once the IVA has been successfully completed you will be free of the debts included in the agreement, even though they may not have been fully repaid. Your creditors are legally obliged to write-off any outstanding unpaid debt.
An IVA forms part of the 1986 Insolvency Act, and is designed to offer itself as an alternative to bankruptcy for people who are insolvent. Qualified professionals, Armed Service Personnel, serving Prison Officers and Police Officers, who otherwise may damage their career prospects by declaring themselves bankrupt, can apply for an IVA to deal with a serious debt problem. Once accepted, the IVA legally binds all parties to the terms offered in the IVA proposal, even those creditors which rejected the IVA proposal.
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