IVA: An Option for You?

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by: Jim Grayson
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Word Count: 365
Date: Sat, 20 Jun 2009 Time: 4:01 PM
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The affects of the failing economy can be felt by consumers all over the world. More and more consumers are finding themselves overwhelmed with debts that they feel like they may never be able to repay. There are many different options available for consumers to find themselves in this desperate situation. One such option for residents of the United Kingdom is to seek an individual voluntary arrangement or also called an IVA.

An individual voluntary arrangement should be a consideration of consumers before they ever even consider filing bankruptcy. An IVA is a formal repayment plan that is drawn up with the assistance of an insolvency practitioner, who specializes in this kind of debt relief. Once the plan has been established it must then be presented to the consumers creditors. At this meeting the insolvency practitioner represents the consumers. After the plan has been shared with creditors, a vote is then taken as to whether not to accept the IVA. There are special stipulations regarding the majority vote that must be a reached in order to accept the IVA. Creditors voting in favor of accepting the IVA must hold at least 75% of the consumer's debt.

As mentioned previously, IVAs showed be considered seriously before declaring bankruptcy. There many reasons for this. First and foremost and IVA does not appear on the consumer's credit report. An IVA does not produce a long lasting affects that bankruptcy can. Additionally IVAs are not public knowledge therefore they do not need to be published in local newspapers as is done with bankruptcies. If a consumer establishes an IVA, they still may obtain credit although this is generally discouraged.

Some individual voluntary arrangements will actually have provisions that prevent the consumer from obtaining further credit. After all, the consumer has placed themselves in a precarious financial situation, therefore its best for them to do whatever they can not to repeat their past mistakes. Another factor to keep in mind is that an IVA can usually last for a longer period of time than a bankruptcy. However this can vary depending on this consumer circumstances.

About the Author

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