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| IVA's |
What is an IVA?
An Individual Voluntary Arrangement is a contract between you and your creditors. Generally you pay an agreed monthly sum, usually for 5 years. This is divided up between your creditors, who accept the sum in settlement of the amount you owe them and agree to write off a portion of your debt.
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How much will I have to pay?
Your monthly payment depends on your income and expenditure, and has to be affordable to you. A standing order authority will be set up and your first payment must be made prior to the creditors meeting.
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What kind of people enter into IVAs?
In a nutshell – people who can’t pay their debts. If you are unable to pay your debts as they fall due, you are insolvent and the law gives you two alternatives - bankruptcy or an IVA.
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Are there other options?
You could get all of your creditors to reschedule your debts, but this may be difficult if you have a lot of creditors. Some banks and building societies have debt counselors for you to speak to. However, unlike an IVA, an informal arrangement offers no guarantees. One or more of your creditors could change their mind at a later date AND make you bankrupt, or charge you high rates of interest later if your circumstances improve. You may also take longer to finally clear your debt.
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What are the advantages of an IVA?
- We help you to calculate what you can afford, and you make just one payment to your client account by standing order each month. The amount is the same over the entire period of your IVA, unless your circumstances change and you can afford more. Typically, your circumstances will be reviewed once every year
- Once your IVA is approved, all your creditors are legally bound by its terms, as long as you stick to your agreement
- Once the agreed term of your IVA is complete (usually after 5 years), you have no further obligations to your creditors. At this point you stop paying the monthly sum, and make a fresh start
- Your employment will probably not be affected. Your employers will not know about your IVA unless you choose to tell them
- Unlike bankruptcy, an IVA is not advertised in the local press and does not exclude you from running a business or lead to many professions terminating your employment
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What do I need to do?
Before your IVA proposal is put to creditors you need to sign it as a "Statement of Truth". You do not need a solicitor for this, you simply read it and sign it. We prepare all documentation for you and we contact your creditors on your behalf (if necessary we will make an application on your behalf to your local County Court for an ‘Interim Order’).
A meeting of creditors will then consider your proposal. You will not usually be required to attend – usually most creditors do not attend themselves, voting by proxy instead. Even if creditors do attend, the meeting usually only lasts for 15-20 minutes. Someone from X-debt will chair the meeting, and you need to be available by phone during this period.
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What else should I know?
A bankruptcy income payment order can be over up to 3 years. The duration of an IVA is 5 years. However, this voluntary increase in the payment term should make your creditors sympathetic to your proposal.
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Will my home be safe?
It is not usual to have to sell your property when in an IVA. If you do own your home, you will need to take reasonable measures at the end of your IVA to make any equity available to your creditors (usually by remortgaging). This requirement is also true for bankruptcy, except with bankruptcy you do normally have to sell your home.
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What if my creditors don't agree?
Over 75% of votes (in value) at your creditor meeting must be in favour of your IVA proposal. Creditors can suggest modifications to your proposal and you can choose whether to accept them or not.
If your creditors don't vote in favour you will still have the option of an informal arrangement with your creditors, or of bankruptcy.
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Do I have to pay any costs?
X-debt does not increase your indebtidness. Fees are taken from the agreed payments into your IVA. Providing you keep to the agreement for five years, any debt you can't afford to repay will be written off by your creditors. You pay only the affordable monthly amount you and your creditors agree to under the terms of the IVA.
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| Debt management |
What is a debt management plan?
A debt management plan is an arrangement between yourself and a Debt Management company who agree to supervise and distribute your debt repayments to your creditors. Some people can restructure their repayments into a more convenient plan and you won’t have to sell your home as part of the agreement. Interest charges are not usually stopped and Debt Management companies may charge a fee for their services.
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| Bankruptcy |
What is Bankruptcy?
Bankruptcy is a legal process that allows you to free yourself from overwhelming debts and make a fresh start by selling your assets and using the funds raised to pay your creditors. Once your bankruptcy has ended, your creditors can make no further claims against you. However, bankruptcy brings with it certain restrictions, such as your situation being advertised in the local press, having your landlord informed, and in certain professions a risk of losing your job.
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| Mortgages and Loans |
Should I opt for a secured loan or remortgage?
This is down to individual choice, mortgage rates are usually lower and set up fees higher than those of loans because of the length of time involved and your home will be at risk in both cases if you cannot meet the repayments.
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Is a consolidation loan right for me?
If you can consolidate all of your existing debts into a loan that offers lower total repayments then a consolidation loan might be the best solution; you will save money in the long run and avoid more drastic solutions. This might not be possible in some cases as many people who are experiencing serious financial difficulties tend to have poor credit ratings; if this is the case then taking on more financial responsibility is likely to make your situation worse.
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What if I have a fixed/discounted mortgage?
You can still remortgage, but may have to pay an early settlement charge to your lender. If your settlement charge is high it might be best to opt for a secured loan.
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How long does the process take?
Remortgages normally take approximately 4-5 weeks and secured loans approximately 3 weeks.
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Are there any up front fees?
None whatsoever.
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