Are there alternatives?
An alternative is an Individual Voluntary Arrangement [IVA] which is an agreement between you and your unsecured creditors, whereby you pay an agreed and affordable sum of money each month, usually for 5 years. The total that you pay is then divided up between your creditors, who accept this sum in full and final settlement of all that you owe to them.
What's an IVA?
Voluntary Arrangements were introduced in 1986 as part of Government legislation in order to provide people in financial difficulty with a second chance. The legislation established a procedure that was formally recognised but one that did not carry the same burden as bankruptcy. If you are struggling to pay your debts you are able to apply for an Individual Voluntary Arrangement. This involves getting together some information about your current financial circumstances and based upon this information an assessment of your circumstances can be made. If you meet the entrance criteria – typically if you have £15,000 or more of unsecured debts with 3 or more creditors - then you can make a formal application. This is a two-part procedure. Part one involves us putting together your proposal for you. Part two involves us negotiating this proposal with your creditors on your behalf.
Who can Arrange my IVA?
Individual Voluntary Arrangement can only be administered by licensed Insolvency Practitioners such as those at DebtMatters. Not all your creditors need to support your proposal. So long as if the requisite majority is reached (75% in value of those who choose to vote) then all your unsecured creditors are legally bound, regardless of whether they voted for, against or not at all. This means that they can no longer pursue you for repayment. Once bound, creditors cannot change their minds and are required to liaise directly with the Insolvency Practitioner rather than with you. This means that any 'threatening' letters and telephone calls that you may have been receiving will stop. Providing you keep up your repayments and comply with the terms of your proposal then at the end of the set term you have no further obligations to your creditors. When the Arrangement is completed you will be issued with a completion certificate and you will be released from all debts that are subject to the Arrangement.
An IVA is a serious undertaking, it may damage your credit rating for up to six years. If you own a property it will be safe in an IVA, however you may be required to remortgage and release additional funds for creditors after three or four years. If you would like to find out more about Individual Voluntary Arrangements and the positive effects a DebtMatters IVA could have on you, please give us a call on FREEPHONE 0800 169 4255.
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