One way used by citizens in the United Kingdom to avoid bankruptcy is taking up an Individual Voluntary Agreement. This is a legally binding agreement between the debtor and his or her creditors onto a viable payment schedule for the dents owed. Mostly, an IVA will cover the unsecured debts and has no implication on the secured debts.
Before one makes the decision to take out an IVA, he or she should consult a financial expert to ensure that this is the best decision to take. The expert is supposed to evaluate your financial situation and come up with a viable way out. If you have already decided on the IVA, then the next step is to look for an insolvency practitioner.
During the agreement, you do not deal with the creditors directly. The insolvency practitioner acts like the intermediary. First, he should help you follow the due procedure to ensure that the agreement is valid. He should guide you on developing an agreement that is to the best of your interest. Therefore, the practitioner should be provided with all the information that he deems fitting to make the correct decisions.
He should then convene all the creditors and explain to them what the agreement entails. These creditors should discuss the agreement in details and ensure that every clause is clear. They are then required to vote on whether to pass the agreement or not. If the agreement has been passed by the creditors, it enters the next stage which is very important.
Choosing an insolvency practitioner
It is prudent to work with a duly certified practitioner to ensure that the agreement cannot be contested on these grounds later on. The Insolvency Practioners Association keeps a well updated record of all the practitioners who are duly trained and certified. You may consult on the selection of the best practitioner for your case with them.
Ensure that the practitioner you select does not charge exorbitant fees to avoid adding on to the already financial turmoil you are experiencing. The fees should be affordable enough. You should compare the fees charged by different practitioners and select one with the most affordable fees. The experience of the practitioner is also vital. Ensure that he or she has dealt with several other cases and therefore is conversant with the whole process and arrangement.
Essentials of an Individual voluntary agreement
First, the agreement should be between a debtor and his creditors. Both parties can be corporate entities like companies or legally registered businesses. The debtor agrees to a regular payment planned they should stick to the plan. The agreement enables the debtor to have ample time to be able to clear off the debts they have.
The debtor therefore gives regular payments to the insolvency practitioner who them pays off the creditors after deducting his fees. Therefore, the amount submitted should be able to cover the fees as well as pay off some of the debt. This goes on for up to six years and then the remaining debt is written off.
The practitioner offering the insolvency service should guide you as the debtor whenever they feel you are lagging behind. Whenever you allow six months to lapse without making any payment, the agreement is deemed to have failed. The legal gag on your creditors against any debt in the agreement is lifted. You may now be forced to face off legal suits as a result of the debt.
Advantages of IVA
This method is good since it gives the individual time to raise the money slowly and pay off the debt. At the end of the agreed period, all the unsecured debts that have not been cleared are written off. The debtor has a chance to make a fresh start with no debts.
There is no stigma associated with this arrangement. The arrangement is known to the parties involved and the public office where the registration is done. Therefore, the person will not be stigmatised in the society. Besides this, the individual does not lose employment due to the arrangement. Most employers respect the personal finances of the individual and will not meddle in these.
Some of the employers may not employ you at a future date if you were involved in an IVA. This is mainly due to company policy. The individuals name is entered in a public register of IVAs. It may also affect the credit rating of the individual over a long period of time. This however gets better as time passes by.