Pay Off Debt Consolidation

An IVA is an agreed upon arrangement between you and those you owe money to. It is initiated by you requesting to your creditors that your payments be restructured. You’re trying to have your monthly repayments reduced and any monies paid being paying towards a percentage of the total amount you owe. After five years, you will be free of any debt.

When you have made the decision to apply for an IVA, you will be asked a series of set questions about your financial situation. The information you give must be accurate as this is key in deciding upon a proposed amount for your new repayment proposal. When this figure has been agreed upon, the proposal will need to be checked and signed before being returned to your Insolvency Practitioner.

In order for an IVA to be approved, your creditors will be asked to vote yes or no. You only need one creditor to vote in favour of your application and it is considered granted. There is an exception, however; if just on creditor votes no and that creditor is due less than 25% of your overall debt then the decision is suspended and creditors who did not vote up to this point will be asked to do so.

If that creditor represents more than 35% of your debt then your application is rejected. More than 75% of your debt has to be in favour of your application in order for it to be accepted. Any non votes, however, will be classed as a positive vote.

You must understand than an IVA is legally binding. If you continue to carry out your side of the agreement, once the duration of the IVA has ended, you will no longer be confronted with your past debts. You will be under review in the meantime, however, with your financial situation being monitored and observed for any change of circumstance.

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Even though people being in debt is a very common occurrence, it is still a very much taboo subject in everyday conversation. Because of this people can start to feel uncomfortable about speaking about their debt issues, even with their nearest and dearest. However not talking to anybody and burying your head in the sand will make things much worse for you. When you know that you have a problem you should start being proactive to solve it.

* Do some calculations and work out whether or not you will be in this situation for the long term. Look at the difference between your income and expenditure. It is a problem if you spend more than you earn! You could find out that is isn’t a massive long term problem, maybe you are on reduced hours for this month but will be back to normal next month? It could however show that you are in dire straits, and that it is a long term issue that you have no way of getting out of.

* If you find that it is not a massively long term problem, you could speak to your creditors yourself and try to sort it out directly. If you are a good customer and make payments on time before now, they will probably help you with some sort of payment break or some other form of assistance, as long as you make it clear that it will not be a long term problem.

* If your calculations tell you that you have a big problem and the problem stretches into the long term, then you should seek advice and speak to a professional. Somebody with experience in these matters will be able to outline your options. There are informal solutions available which they can tell you about, or they could tell you about an IVA or one of the other many solutions. These people are the best people to tell you what your options are and just how bad a situation you are in.

You cannot just ignore your problems, and whether it be an IVA or debt management plan or anything else you have to do something proactive to deal with your debt issues. Even if you can’t pay them back, you should have a chat to your creditors to see if they can help you because it at least gives the impression that you are being proactive. Saying that, if you enter into an IVA somebody else will deal with them, but if you are below this level it is probably best to keep them sweet!

Learn more about IVA and debt management