Everyone desires to have a comfortable financial life. Maintaining financial freedom can sustain your lifestyle comfortably, have a stable supply of your basic needs, pay off your debt in time, and even have savings to offer financial cushion should it come to the worst.
One way you can pay debts to your creditors involves an individual voluntary arrangement (IVA). An IVA refers to the legal agreement that you draw with your unsecured creditor to remit monthly payments for a specific period after which the remaining debt becomes null and void. However, the arrangement does not apply to everyone who has an outstanding debt. Below are the criteria that will determine whether you qualify for the IVA.
1. What is the Worth of Your Unsecured Debt?
Not every debt qualifies for the individual voluntary arrangement. It is only applicable if you have an outstanding debt of $6000 and more. Additionally, you must be unable to pay your debts and have due payments that you can’t settle. Another eligibility criterion includes having a more outstanding value of your liabilities compared to your existing assets.
2. How Many Creditors Do You Have?
If you have only one creditor you need to certain debts with, the IVA is not suitable. You should have two and more creditors who are unhappy with your inability to repay the debts and therefore want a workable solution.
Additionally, the debts which an IVA can cover include store card debts, overdraft, personal loans, tax credits, joint debts, income tax, and even utility bill arrears. It is also essential to note that you may not be eligible for some debts such as mortgages, higher purchase installments, student loans, secured loans, child support, and even debts obtained fraudulently.
3. Your Residential Area
Your residential area matters significantly before qualifying for the individual voluntary arrangement. The law states that England, Wales, and even North Ireland should be your current residence. Alternatively, eligibility matters if you have lived within the countries for the past year running up to the application. If you also have a physical business operating in the above locations, you can qualify for the debt repayment plan.
If you live in Scotland, you don’t have to worry about lacking the individual voluntary arrangement plan if you are struggling to pay your debts. You can use a trust deed in making the payments.
4. Your Income
Your income should be steady flowing in continuous streams every month to help you make a minimum amount of £85 every thirty days.
The payment typically lasts over five or even six years. You can assess the IVA calculator to evaluate what you will part during 60 months running up to 72 months. Consulting your insolvency practitioner is ideal as they will set up the IVA. Additionally, the arrangement caters to a minimum of 75% of your current debts, which your creditors should agree on inclusion.
Therefore, your creditors will have a meeting upon which they will agree to take the payment plan. However, should one creditor refute the payment, it will still apply to them.
Alternatively, you can also have assets that will provide a reasonable payment plan to your creditors. You can also include your lump sum ability to pay the debts owing your creditors, which will qualify you for the IVA.
5. If Bankruptcy was Next
If you’re about to be declared bankrupt, choosing, the individual voluntary arrangement will save you the ordeal of going through the process. Additionally, the courts may also have ruled you bankrupt and asked another financial partner to take charge of your financial assets and liabilities to settle your debts. In that instance, you can present your individual voluntary arrangement to the court with the aim of the order annulment using the petition.
You are also allowed by law to sell any valuable items under your name whose proceeds you can use to settle your debts. Any savings plan will have to go towards paying your debts. Additionally, your credit score rating will decrease during the repayment plan for six years from the IVA’s approval.
It is also essential to note that the individual voluntary arrangement will affect different aspects of your financial capabilities. For instance, your spending, borrowing, assets, savings, work, and even business will have a sting of the program.
Typically, you must uphold your budget during the repayment plan, and you can only borrow a maximum of £500 during the repayment.
There must be proof showing your struggle in making timely payments towards your unsecured creditors. However, the convenience of avoiding bankruptcy and living a debt free life after making the payments is a boost for your financial capability. Additionally, it protects your remaining assets from your outstanding creditors.
