IVA vs. Informal Agreements

When individuals are having debts that they can’t make payments easily for, then there are a number of alternatives that he/she can explore and avail. One of the useful and common options is known as Individual Voluntary Arrangements (IVA), it helps people to keep their finances under control and manage them but there are certain situations in which an as Individual Voluntary Arrangements (IVA) is not possible for individuals or is not recommendable for different reasons.

Personal Negotiations
One of the recommended tips is that if you are having debts, say from credit cards then you should always contact your creditor direct and negotiate about your credit agreements personally. For example asking for reduced monthly payments etc. there are chances that this process can be stressful and it may not result effectively and in renegotiated terms because it is up to your creditor to decide that whether they want future negotiations with you or not.

Using Individual Voluntary Agreements
Those who are having unsecured debts, and are facing bankruptcy due to improper management etc. an IVA can be helpful for them to avoid such consequences. By having an IVA, you would be able to negotiate about your credit agreement etc. in an effective way but these negotiations are done and handled by your insolvency practitioners. It also saves you from any legal action from your creditors because your IP is best placed to be used.

Legal protection
The foremost advantage of having an Individual Voluntary Agreements is that your creditor who is in involved in your debts cannot take any legal action against you while it is in process. Once the Individual Voluntary Agreement has completed they are unable to pursue your debts anymore and they need to consider them settled. However, if a person is using any informal agreement with his individual creditor they will be free to take any legal action against you in courts at any time, there won’t be bound.

Another major advantage of using individual voluntary agreements is that they can cover all of your unsecured debts easily. Your IVA proposal is accepted in the meeting of creditors in which they discuss things that weather they should or not. The rule of majority’s authority is followed, as long as most of the creditors vote for your proposal’s acceptance they all will be bound for it. As IVA is a legal contract, so your interests are protected by the force of the law.

The requirement for getting an IVA is that you need to meet specific criteria. Usually, the first thing to be considered is that you need to have at least £15,000 of debt, and to at least 3 different lenders. Secondly, a person needs to have enough of his monthly income to make an IVA payment every month. Normally monthly payments for IVA are no less than £200, but this does vary according to different creditors.

Individual Voluntary Agreements can be very helpful in minimizing your stress of dealing with the creditor personally. However, if you are unable to utilize IVA for yourself for whatsoever reason you are having there is a lot of other alternative options you can explore, one of which is debt management. Debt management organizations are helpful for everyone as it can give you advice about how to manage you debts more effectively, and can also play a role of a mediator between you and your creditor to reach any informal agreement or to settle any other issues etc.

If you consider yourself to be able for fulfilling the requirements for availing an IVA and you are facing bankruptcy due to mismanagement of personal unsecured debts than that is a option no doubt worth considering because it will make the management of your debt easier and convenient for you and you won’t be worried about bankruptcy and any legal action by the creditor after availing an IVA agreement. However, you need to understand that exploring additional options is a must for everyone. You should avail what is best for you and can be beneficial in the longer run and this won’t be possible if you would not be searching for additional options for managing your debts.