Many people are completely unaware of the Individual Voluntary Arrangement or IVA, until they have a need to deal with a debt load that is threatening to undermine their lives and create a high degree of distress in their personal finances. For this reason, understanding exactly what this agreement is and what it entails is very important to the process of getting out from under that mountain of debt and being able to discharge the debts in a timely and responsible manner. Here are a few basics you need to know about how an Individual Voluntary Arrangement works and how it can help you.
Essentially, an Individual Voluntary Arrangement is a legally binding document that establishes a schedule for repaying outstanding debt obligations to creditors within a period of no more than sixty months. If the provisions within the IVA debt arrangement meet with the approval of the creditors and the schedule is within the conditions set by law, the court can approve the document and it goes into immediate effect. As long as the debtor abides by the terms of the agreement and makes the scheduled payments on time, the creditors will not attempt any other type of debt collection or seek any liens on any of the debtor’s property.
The specifics of how the IVA debt obligation is arranged will vary somewhat, depending on the range and type of creditors involved and what means the debtor has to repay the debt. In some cases, a number of the creditors may settle for an amount less than the original debt. At other times, the debt may involve property that makes it necessary to consider an IVA remortgage arrangement as part of the deal, possibly with the inclusion of a Scottish trust deed as part of the overall repayment plan. The court will review any provisions for IVA loans and the necessity of any type of IVA remortgage arrangements as part of its consideration. Assuming that the court is open to the plan and there are no objections from the creditors involved, there is a good chance it will be approved with little or no modification.
One of the benefits of this type of debt solution is that once the application is made to the courts, all attempts to collect the outstanding debts must cease. Typically, the court will grant what is known as an Interim Order, which prevents creditors from taking any action against the debtor until it has had time to review the circumstances, interact with the creditors and reach a final decision. The immediate effect for the debtor is that threats by post and telephone cease, often taking a great deal of stress off the shoulders of the debtor and making it easier for him or her to consider a plan of action from a more objective position.
It is important to note that even after the court consults with creditors and chooses to approve the IVA, it does not mean that the financial situation of the debtor will not be monitored throughout the duration of the arrangement. The idea is to protect the interests of both the debtor and the creditors and make adjustments to the arrangement if the court believes such actions are merited. For this reason, the debtor must regularly supply the courts with documentation regarding their current level of income, as well as information about the total outstanding debt, to ensure that they are still in compliance with the directives of the court.
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