Individual Voluntary Arrangements

An IVA is otherwise known as an Individual Voluntary Arrangement.  It is basically a government scheme that allows a debtor to clear unsecured debts without the need to start bankruptcy proceedings.

An IVA allows a debtor and creditors to compromise with the outstanding debts thus avoiding the need to enter into bankruptcy proceedings.

The debtor must be aware however that unlike a Debt management Plan, an Individual Voluntary Arrangement is actually a legally binding contract  and is still governed by the same legislation as bankruptcy proceedings.

An IVA enables a debtor to set a period of time (which is usually five years) in which to pay a pre-agreed monthly payment into the IVA.

The creditors must agree not to undertake legal action and agree to write off any debt that is left over at the end of the IVA period.

There are many benefits of an IVA as follows:

• No direct fees to be paid. The Insolvency Practitioner will collect his fees from the debtors contributions to the creditor.
• Legal action and collection action will stop.
• Stops temptation to get further into debt.
• Monthly payment is based on what you can afford.
• Forces the debtor to address his/her financial management issues.
• Debt free in 5 years.
• No more worry or hassle from creditors throughout the term of the IVA arrangement.
• Avoid bankruptcy.
• Interest and charges are frozen.

Sequestration