An IVA is an Individual Voluntary Arrangement. This works as an agreement between you and your creditors as a way of settling your debt within a five year period.
The amount you repay on a fixed period is worked out by assessing your monthly income and disposable income, from this it can be agreed what you are to pay back. There are IVA pros and cons.
One good thing is that in agreeing to an IVA from that point no more interest shall be charged to it as it is frozen at the point you agree, also this agreement can reduce the amount you have to repay, up to 65% in some cases!
The IVA is a very good idea by the looks of it, as long as you keep your agreed payments and do not fail to meet the conditions legally agreed to.
Your creditors will not suddenly demand extra payment as by law they cannot ask more from you than what was specified in the IVA. This applies to the creditors as much as to yourself.
In summary I think the IVA is a very good idea and not something which is likely to worsen a situation. If you think about it you are formally setting down to repay debt. Also you are doing so with a level of protection you could not get elsewhere. But, the major bonus would be that without such a thing it could be likely for the person to have to declare bankruptcy which only serves to bring bad news in the future. An IVA can work.
The three most important steps you need to take in order to get out of debt are: Communication, Communication, and Communication.
Communication will be provided to you by your creditors, DO NOT IGNORE IT. Open letters you receive, take notice of the figures and dates mentioned, along with any proposed actions or deadlines for action. A ‘Head in the Sand’ approach is no good. This won’t go away, it has to be addressed – you have to find a debt solution!
Communication from yourself to your creditors is also vital. Reply to their correspondence, discuss your situation with them, ask them questions, ask their advice, deal with them in a reasonable manner and chances are they are more likely to reciprocate in a similar way. Ask for debt advice – there is plenty available.
Communication between yourself and your partner, (if you have one), is the most important of all. You can’t go into this alone, you can’t hide it away thinking it’ll all go away or that you can handle it. Couples in debt need to be open and attack it together. Working as a team will not only halve the workload but will remove a lot of the stress from the situation –debt can affect your health.
Staying out of debt in today’s society can be extremely tricky. Remember not all debt is bad and loans such as mortgages, provided they are adequately managed, are not generally harmful. Getting into debt to fund a lifestyle that your income will not accommodate, however, is bad news.
Writing a SOA (statement of affairs) is the first crucial step to ensuring that you do not get into debt. Write down absolutely every bit of income, including benefits and any maintenance payments. Then make a full list of all outgoings. Don’t forget to apportion annual costs such as holidays and birthdays. This budget should give you a reasonable idea of your current status in terms of whether you are living beyond your means.
If you have sufficient income left over but never seem to have any money, it can be helpful to keep a spending diary for a week or two detailing everything you buy. You’ll be surprised how much that sneaky coffee on the way to work adds up every day!
If you simply do not have enough income to pay for your expenses you have two basic options; increase your income or decrease your expenses. A combination of the two should work to bring you within your budget. If you can, try to arrange for some form of debt reduction.
With debt, ignoring the situation is guaranteed to make it worse. Get debt advice, keep on top of your situation and you will be surprised how quickly things turn around!