Tag: IVA

How Many Of My Creditors Must Agree To An IVA?

Typically, a debtor must have a minimum of £10,000 of debt with at least two creditors in order to be considered a suitable fit for an IVA. An Insolvency Practitioner will then attempt to come to an agreement with those creditors to accept regular repayments totalling a reduced amount of the debt. Certain criteria must be met for the IVA to be considered legal and effective; not all of your credits need to agree to the IVA schedule for it to go ahead, however.

Creditors that are owed 75% or more of your debt must agree to the proposal. If you owe 5 creditors £3,000 each then if four of the five creditors agree, your IVA will be accepted and you will enter into agreement to pay the agreed amount.

If you only have two creditors for roughly the same amounts of money then your Insolvency Practitioner will have to ensure that both of them agree to the repayments. Your Practitioner will work with you to determine who and how much money you owe and they will attempt to draw up a repayment agreement with each to ensure the greatest chance of approval. If a proposal is rejected then your Insolvency Practitioner will usually work with creditors individually to ensure that an agreement is reached eventually.

Can I Have A 2nd House With An IVA?

An IVA is a formal agreement meant to reduce the levels of debt a debtor has. It is considered a final step and alternative to bankruptcy and an Insolvency Practitioner will work with you to ensure that it is the best option. A second house is likely to be seen as a means of raising capital to pay off your debt and you may be expected to realise the capital in your assets in order to repay debts. As such, it is unlikely that you will be allowed to keep a second home when entering into an Individual Voluntary Arrangement.

In such circumstances you should speak to a professional Insolvency Practitioner or other personal finance expert. They will discuss your insolvency options with you and help determine what your best options are.

In an IVA, your Insolvency Practitioner will attempt to come to a formal agreement with creditors. A majority of creditors must agree to the terms of the agreement and if they are aware of the existence of a second home or income from a second home then they may demand that the property be sold in order to meet your financial requirements and pay off the debt that you have accumulated.

How Soon After My IVA Can I Get A Mortgage?

An IVA will remain on your credit file for a total of six years from the date that you first come to the arrangement. If your IVA, therefore, lasts for five years before you have repaid all the debt then you will still have to wait for another year before it comes off your credit record. What’s more, you are likely to have to rebuild your credit rating before you will be accepted for a mortgage.

An Individual Voluntary Agreement is reported to the credit bureaus as soon as it is agreed. It will remain there for a total of 6 years. Most IVAs last for a period of 5 years which means that your IVA will be visible on your credit report for at least one more year after you have finished making your repayments.

Mortgage lenders, and other lenders, are more reluctant to lend money now than ever before. Even sub-prime lenders will usually require that you can show good credit rating. This means that there is evidence of having taken out debt and kept up repayments. Once you have finished paying off your IVA you will need to start rebuilding your credit rating before you are likely to be accepted for any kind of credit.

It is likely to be at least six years from the date of the start of your IVA before you can take out a mortgage.

What Is An IVA?

An IVA or Individual Voluntary Arrangement is a repayment plan that helps debtors with large amounts of debt to repay a reduced amount of what they owe. It is a legally binding agreement between you and those that you owe money too. Some debts, including your mortgage, cannot be included in the agreement and you will be expected to repay this amount in full. The amount of money that you owe under an IVA will usually be reduced by up to 75% following agreement with your creditors.

An IVA is meant as an alternative to bankruptcy and while it can help greatly reduce debt levels, there are pitfalls and negative aspects to an IVA. The IVA will usually stay on your credit record for a period of 6 years and you will find it more difficult to obtain credit during this period. However, if you are in such a position where an IVA is your best option then you are unlikely to be able to successfully apply for credit during this kind of time period anyway.

The IVA is a formal agreement so a failure to meet an agreed repayment means the IVA could fail. It is also unlikely that you will be able to make small changes if you are struggling to live within the terms of your IVA, although a major change such as a change in employment means that you may be able to amend the terms of your agreement.

In order to be eligible for an IVA you typically need to have a minimum of £10,000 unsecured debt. Usually, this debt will be with a number of creditors although agreement may be reached with a single creditor to reduce debt, if it is in the best interest of the company concerned. A minimum repayment of £100 per month is normally required; however, the more money you owe, the more you will usually be required to pay.

You will need to use an Insolvency Practitioner who will aim to make arrangement with you and your creditors in a bid to make payments against your debt. They will look at your personal circumstances, determine how much you can afford to pay after necessary household expenses, and how much creditors are willing to accept. Using an Insolvency Practitioner will improve your chances of having creditors come to an agreement over the money that you need to repay.

An IV, or Individual Voluntary Agreement is meant as an alternative to bankruptcy that will help a debtor clear debts of £10,000 or more, typically over a period of 5 years. It is a formal agreement and it is necessary to stick to the agreement once made. It can help you become debt free and meet agreed regular repayments once the terms have been agreed.