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If you are struggling with debt, either financially or through your company then you may want to look at options such as an IVA. Firstly it is important to establish whether or not an IVA is for you, they are a good alternative to bankruptcy but they are not for everyone and not an easy option to get out of debt. If you find yourself in unmanageable debt and are seriously considering bankruptcy then an IVA may be a better alternative. An IVA is an Individual Voluntary Arrangement, and this is an arrangement between yourself and your creditors to pay back most of your debt at a reasonable and affordable amount. This should only be entertained if you cannot afford to pay back the agreed amounts, many creditors would prefer to make an arrangement with you rather than you go bankrupt and write off the majority of all debts. From your perspective you will be in a much stronger financial position to go down the IVA route rather than bankruptcy as you may be able to keep your assets such as your home and car. Using an Insolvency Practitioner you will need to contact your creditors, anyone who has lent you money, this may be a store card, a ban, finance on a car etc. IVAs have been around since 1986 and were created as a way to help small businesses manage debts, this has now changed and we now see a lot more individuals finding themselves in financial difficulties needing to set up IVAs.
Applying for an IVA
If you think you may need to apply for an IVA you need to have a stable income, most creditors will grant you an IVA if you also have assets such as a house or car. Not all debts can be covered by an IVA, you will need to check with your insolvency practitioner but as a general rule mortgages, court fines, child support arrears or any loan secured on your house cannot be included in the IVA. However, things like credit cards, student loans, overdrafts and money owed to the HMRC are usually included but any tax or VAT owed to the HMRC will usually take priority. You cannot set up an IVA by yourself as this is a legally binding contract therefore you have to appoint an Insolvency Practitioner (IP). Once you have contacted your IP, they will then, in turn, get in contact with your creditors. You must disclose all your debts and creditors, your IP will work out your income and assets and find a way for you to manage payments in a lump sum and/or monthly payments. Your IP will work within your best interests but also to the advantage of your creditors. Your IP will apply to the court for an Interim order, this will give you time to sort out the agreement without any of your creditors starting bankruptcy proceedings against you. You do not need to have an interim order placed with the courts but it is advisable if you have gotten to the point where a creditor may take action against you. Your creditors make up 100% of the debt, your IP will put together a proposal for your IVA, as long as the creditors who are owed 75% of the debt agree with the proposal then the IVA will go ahead. Once they are in agreement, your interest on the debt is frozen and you will no longer have contact with your creditors, Your IP will sort out payments which will usually last for 60 months (5 years). If you want to discuss your options Lines Henry can help in all areas of Insolvency advice.