IVAs Explained

An IVA is not something that you can do for yourself; it requires specialist handling. Below you will learn some of the most pertinent facts relating to IVAs that will help you decipher some of the technical jargon you might come across.

Timescale: Generally an IVA lasts for a period of five years over which time you must make regular and fixed payments.
Type of debt: IVAs only apply to unsecured debts such as credit cards, overdrafts and bank loans.
Payments: You make only a single monthly payment which will be based on the amount of money you can afford after taking your income and your living expenses into consideration.
Home: You will not lose your home but if it has equity than that could be used to reduce your debts.
Debt Write-off: Although you will need to make affordable regular payments for five years and to use equity in your home, any remaining unsecured debts will be written off completely.
Publicity: Details of your IVA will be published in the publically available Insolvency Register.
Acceptance by Creditors: For your IVA to go ahead it is essential that 75% of the money you owe is considered by your creditors as being acceptable for an IVA. If any of your remaining creditors disagree it makes no difference; they too will be bound by the IVA.
After Discharge: After your IVA has been discharged you are completely free to become a company director and start up a business.
Credit Rating: Your credit rating will be seriously damaged by an IVA. You will not be able to remove it from your credit report until at least six years after the IVA has been approved.
Further Borrowing: During the course of your IVA you will not be able to take out any further loans, though in practical terms even if this was allowed you would find it very difficult to do so.
IVA Qualifications: In order to qualify for an IVA you need to be able to show that you cannot afford to repay your current debts in a reasonable time scale, that you owe money to at least two different creditors, and that you are able to commit to make regular payments for the next five years.

When Is It A Good Idea To Start Consolidating Your Debt?

Do you know when you should start consolidating your debts? Here are some signs that you should start looking into this helpful process…

When You Start Missing Payments
If you are starting to miss payments, for whatever reason, it is time to start consolidating your debt. Missing payments is a really bad thing, and you need to get on top of it as soon as possible.

When You Don’t Know What You Are Paying
Sometimes, people’s debt gets so bad that they don’t even know what they are paying out anymore – they just see the bills and try to make the payment. Being out of control in terms of your debt is one thing you really want to avoid, and when you have lost this control, it is time to consolidate your debt. There is no way you can efficiently control your debt if it is held in 10 or 15 different places, each with different due dates each month.

When You Are Ready To Attack Your Debt Head On.
Consolidating your debt is a good idea when you decide that you have had enough and you want to pay off your debts. There comes a point in your life where you have had enough and want to make some changes to secure your future. When you start to have these feelings, you should start looking into consolidating your debt and moving forward.

If you recognize these signs, you can start consolidating your debt before it is too late!