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Viewed: [264] | Comments: [0] | 3-02-2010, 21:58
An IVA or Individual Voluntary Agreement is a contract or deal you make with your creditors (those you owe money to). It is for people whose only other option is to go bankrupt, and it offers an alternative to bankruptcy. Under an IVA the applicant will tell their creditors that there is no way they can be paid back all the money that is owed. The applicant explains that their only other option is bankruptcy. Under an IVA you are offering your creditors a deal: you'll pay back a percentage of money owed in settlement of the debt, or you'll have no option but to make yourself bankrupt.
A typical IVA works like this: you promise to pay a monthly sum of money over a period of time (usually between 1 and 5 years). The sum of money will invariably be less than the total amount you owe to your creditors. In return your creditors agree to take this lesser amount you are offering to pay as an end to the matter. Furthermore, they are not allowed to chase you for money any longer. As the law says, they take the lesser amount you are paying as “full and final settlement” of the money they are owed. Effectively it is a settlement that is beneficial to all parties – the creditors will receive a payment, and the applicant will not be made bankrupt.
A typical IVA works like this: you promise to pay a monthly sum of money over a period of time (usually between 1 and 5 years). The sum of money will invariably be less than the total amount you owe to your creditors. In return your creditors agree to take this lesser amount you are offering to pay as an end to the matter. Furthermore, they are not allowed to chase you for money any longer. As the law says, they take the lesser amount you are paying as “full and final settlement” of the money they are owed. Effectively it is a settlement that is beneficial to all parties – the creditors will receive a payment, and the applicant will not be made bankrupt.