Government IVA is the agreement with the creditors to pay all parts or some parts of your debt. You agreed to make regular payments which will be divided between creditors. IVA is the individual voluntary arrangement which gives you more control of your assets than bankruptcy. The government IVA will stop the creditors to take action against your debts.
What is government IVA?
It is a legal and formal agreement that is approved by the court and the creditors have to stick to it. This can be flexible to suit your need but these are also expensive and there are many risks involved in it. Government IVA is set up by a qualified person who can be a lawyer or an accountant. The practitioner will charge fees for it. This can often be high or it is based on the amount of your payback.
The repayment plan with the insolvency practitioner can be monthly payments, a lump sum, or a combination of both. It is based on the amount that you can reasonably afford and the creditors need to agree to it. If you make monthly payments, it will usually last for 5 to 6 years. The repayments will be directly paid to the practitioner. They distribute the money to the creditor and they also charge for providing services to the clients. The insolvency practitioner often advises you to make payments accordingly.
How to set up an IVA?
The insolvency practitioner gives you with all the available options. This makes you read and understand the pros and cons of volunteer arrangements. You can easily apply it to the court for an interim order. It will stop your creditors to take action against you while the IVA is being set up. They look up at the financial situation which includes the income, savings, and assets. The practitioner helps you write a proposal to the creditors and the court. You agree to repay the creditors in part or in full over a certain period of time. They also prepare a report for the court that includes their opinion.
The report and the proposal include the full financial statement along with income, the reasons for the creditors should agree to the government IVA, the proposal of setting out the terms of the proposed IVA. With the help of the practitioner, you can decide the most appropriate proposal that it depends on the circumstances. They take into account the rights of the creditors to be displayed along with the ability of the clients to repay them.
It is also important to check whether you can afford the government IVA. You should have spared income each month in order to pay your creditors. If you have a normal and predictable income, IVA will be right for you. It depends on your monthly payments and the amount you are paying the creditors over a period of time. If you have a fluctuating income, an IVA might not be right for you. So think wisely, before committing to it.