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An IVA Cancels a Portion of your Debt

An IVA, or Individual Voluntary Arrangement, is a program that cancels a portion of your debt so you do not have to pay it back. This legal agreement between you, the creditors and a Licensed Insolvency Practitioner will cancel up to 75 percent of your total debt in a legal process requires you to apply and complete paper work. Undergoing an IVA guarantees that any of your unsecured creditors cannot come after you and request payment for the debt you owe them. The remaining debt, after a portion is dissolved, is combined into one sum so you can make one payment each month for up to five years, depending on the circumstances. Finalizing the IVA means you agree to pay back the remaining debt on time, without incidence. It is important to follow the program according to the terms so you do not have additional negative marks on your credit record.

The IVA program may give you the idea that this is too good to be true, but remember that it is a legal process. All your debt is turned over so the creditors are no longer involved and they are not legally able to contact you for payment. The reality is that many creditors are often accepting of this action because they are guaranteed to get a portion of their money back. An IVA is not a immediate fix to a serious problem as it takes up to eight weeks to complete the paper work and get everything filed.

Having an affordable payment at a reduced amount will help you get back on track financially, without having to file for bankruptcy. There is a minimum amount of debt required for you to file for an IVA, and the debt must be from an individual and not a business. An IVA will post to your credit rating, however excessive debt that you are unable to pay also has a negative affect on your credit score. Filing for an IVA may reduce your ability to secure a loan in the future, until you have built your credit score up to an acceptable value.