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How long does an iva take to set up ?

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The Individual Voluntary Arrangement is one sort of legally binding settlement agreement between a person & their bankers to repay their debts. For certain people, an Individual Voluntary Arrangement can be the difference between bankruptcy & debt repayment, however, some are still confused about how do they work? Well, today’s guide will define what is IVA, how an IVA works, & how to set up an IVA if you qualify for it, & where you can get the advice you need if you find yourself struggling to repay your debts.

So, without further ado, let’s check out!

What is an IVA?

As we have already mentioned IVA is a settlement agreement that allows you to connect multiple debt payments in one payment. These payments will be shared among the lenders. And unlike the Debt Relief Orders, for instance, IVAs secures your property, car, as well as other assets from legal step by creditors.

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The regulations put in place at the beginning of your Individual Voluntary Arrangement will establish a simple and straightforward route towards a debt-free life. Provided you maintain the monthly payments for the length of the contract, which generally lasts for 5 to 6 years, the entire agreement will end with your debts being written off when paid in full.

While an Individual Voluntary Arrangement is an appealing proposal for those struggling with the financial crisis, it is pretty necessary to be aware that, when started, you’re an associate of a legally binding agreement. So, before preceding with the IVA, you need to make sure that you understand the benefits & risks factors– & in case you are not sure, you may consider contacting a financial advisor for iva debt advice!

How do you determine if you qualify for an IVA?

Individual Voluntary Arrangement is an amazing way to repay the debts if you are struggling with your debt level, & think you would be able to repay the whole amount with smaller monthly payments. For getting an IVA, however, you are required to meet a few criteria.

An Individual Voluntary Arrangement might be a useful solution if you:

  • Stay in Wales, England, or Northern Ireland
  • Borrow money to different lenders (at least two or more)
  • Have debts of £6,000 or more
  • Would be able to afford monthly payments of £80 or more every month

Well, always keep in mind, IVAs are demanding & can influence your daily routine & lifestyle. The whole process incorporates dedicating an important portion of your money towards the monthly payment. You should always seek iva debt advice from a professional agency before committing to such kind of settlement arrangement.

Thinking about the restrictions on who can use an Individual Voluntary Arrangement?

An Individual Voluntary Arrangement is a flexible debt solution – & honestly, there is no minimum or maximum amount of debt that can be incorporated. Provided you live in Northern Ireland, Wales, England, & are not under a bankruptcy system, for instance, there are certain barriers to you employing an IVA settlement plan.

The principal restrictions on utilizing an IVA apply to the types of debt that can be incorporated, & some considerations for homeowners.

Types of debt

The majority of the debt can be incorporated in your Individual Voluntary Arrangement proposal. Debts that are eligible involve:

  • Store cards 
  • Credit cards
  • Overdrafts
  • Payday loans
  • Student loans
  • Debts to friends, family, & neighbor

While the majority of the debt are eligible, there are a few exclusions, like child support arrears, council tax arrears, or any kind of legally enforceable fine, like traffic or court fines. Well, secured loans can also exclude from the settlement plan!

Individual Voluntary Arrangement for homeowners

In case of a mortgage, it is pretty doubtful that it will be incorporated in your IVA settlement plan And this is because the debt is secured against the house. 

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Your mortgage payments will be protected during an Individual Voluntary Arrangement, however. Your Insolvency Practitioner will handle the entire matter & you don’t need to be getting worried about it at all!

How do you set up an IVA?

The very first consideration you will require to make is how to set up IVA. Well, it is not possible for people to manage the whole thing on their own, & that is where your Insolvency Practitioner comes in. Your Insolvency Practitioner is your representative in all matters related to the monthly payment plan. They’ll handle your IVA, & give you the best possible money advice. 

For hiring an IP you might require to visit a different Insolvency Service website, or one might be assigned to you when you’re collaborating with a debt charity or a debt advice company.

But, here you need to be sure whichever IP is providing you advice is accredited by the Financial Conduct Authority (FCA). If they aren’t authorised & controlled by FCA, you should look for advice elsewhere.

When you’ve found an Insolvency Practitioner, whether, through any reliable Insolvency Service or any other way, they’ll handle the entire thing on your behalf, considering each and every factor such as your monthly credit history, income, expenses, debt level, as well as overall financial situation.

Need help determining which IVA firm is best for you? Feel free to get in touch with us!

How long does it take to set up an IVA settlement plan?

If you determine an Individual Voluntary Arrangement is the best bet for you, this can be set up pretty quickly – the basic advice is that, barring any unforeseen situation, your Individual Voluntary Arrangement could be ready to go within 1 or one and half months!

Before start setting up the IVA settlement plan, your Insolvency Practitioner might petition your lenders to stop them from taking any legal step against you while the settlement plan is being prepared. Afterward, they’ll have a look at your financial status.

Your Insolvency Practitioner requires to determine your monthly income so they can understand what people can afford to pay back. They’ll require access to your credit record, bank statements, as well as assets if you have – whether that’s a car, a house, or access to any upcoming amount such as an inheritance.

Thereafter, they’ll require to know about your debts – how many lenders you’ve, how much money you owe, & what kind of debts are incorporated. This is pretty necessary you give the correct account, so each debt can be incorporated in your payment plan. When your Insolvency Practitioner has all that details, they’ll draft an IVA settlement proposal to your lenders, & wait for it to be agreed upon.

Who manages payments to lenders during the IVA settlement plan?

Apart from setting up your IVA settlement plan, your Insolvency Practitioner has another important function, which is to divide the payments to your lenders during the settlement agreement. When your IVA gets agreed upon by lenders, you can consolidate the debts into one monthly amount to be shared.

Your IP also deals with any charges or additional fees, & will provide you a precise report of how as well as when monthly payments require to be made.

The fees incurred by utilising this process are recovered from the lenders, not directly from you. So, that’s mean your IP will make the correct deductions for their services every month before payments are divided to your lenders.

What if my condition changes during my IVA  settlement plan?

Changing financial conditions is pretty common. Being an IVA holder, you can always rely on your IP define about your financial situation changes – whether it is for better or worse. Below are some of the most common changes people often encounter during an IVA settlement plan.

Popular Blog : What is an iva loan? Get Easy Tips To apply for iva in UK

Payment holidays

If you think that your situation has changed & you’re struggling to satisfy your monthly obligations, or if you encounter sudden, financial problems it might be possible for your IP to negotiate with your lenders to give you a ‘payment holiday’, that will enable you to get back to the same way towards paying back the debt.

Payment reductions

In case of defaulting on monthly payments can hit your credit rating as well as score very hardly. So, if any kind of change in circumstances is going to influence your capacity to pay back your debt, then try to decrease the monthly payment amount. Again, it is performed by a professional IP, who will negotiate on your behalf.

Additional contributions

This is possible that your circumstances will improve during the IVA settlement plan, in which case you must seek iva debt advice from your Insolvency Practitioner. You might be able to utilise a cash injection in order to make some additional payment to your lenders or use a lump sum in order to end your IVA early & also kickstart the rejuvenating credit score!

The Bottom Line

That’s all about how long does an iva take to set up. Hopefully, now you are aware of how to set up an IVA. If you want further details, stay tuned with us! Good Luck! 

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