IVA’s can be the best way to stop house repossession. Individual Voluntary Arrangements, or IVAs, keep control with an Individual Voluntary Arrangement.
What is an IVA?
You don’t have to sit back and let your home be repossessed from under you. You can take action. It is possible to prevent repossession by arranging an IVA, or Individual Voluntary Arrangement. An IVA helps you restructure your debt repayments, making it easier for you to handle them comfortably.
While it is wiser to arrange an IVA as soon as possible after you run into financial trouble, IVAs are often used as a last resort to stave off repossession at the last minute.
There are several ways to stop house repossession in its tracks and delay the proceedings, giving you a valuable breathing space in which to voluntarily rearrange your finances:
1. Pay an insolvency practitioner, who can apply for an Interim Order on your behalf. This can give you the extra time you need to review your overall financial circumstances and propose an IVA to your creditors.
2. A judge can issue a ‘Suspended Possession Order’ in Court. This lets you pay your mortgage arrears off in a structured, controlled way over a sensible time period.
3. In some circumstances you can include mortgage arrears as a debt in your IVA, although this isn’t common practice.
4. A good mortgage broker might even be able to find a new mortgage lender who’s happy to take on your arrears as part of a new single mortgage payment. This would be based on the usual lending criteria as well as the amount of money your home is worth.
It is often best to take control your financial situation yourself via an IVA than let control slip through your hands because of repossession.
Can I apply for an Individual Voluntary Arrangement?
Anyone with personal debts over £15,000 is eligible for an IVA. All of your creditors need to agree the IVA, and you should be able to afford the monthly repayments. The amount you pay each month will depend how large your debt is, but monthly repayments are likely to be at least £200 a month. If you are lucky enough to have some equity in a home, or you own other valuable assets, you might be asked to pay a lump sum towards your debts.
Which of my debts qualify for an IVA?
Usually, you can cover all your personal unsecured debts with an IVA:
• Credit card arrears
• Personal loans
• Store cards
• Bank and other overdrafts
• Tax debts (Inland Revenue and VAT)
Which of my debts do not qualify for an IVA?
• Court fines and legal penalties
• Secured debts
• Council Tax arrears
How much money will the IVA cost me?
Many accountants will charge nothing for setting up your Individual Voluntary Arrangement. Most charge the creditors a fee for IVA set up.
How to get an Individual Voluntary Arrangement
IVAs are legally binding? So you must use an official insolvency practitioner to propose your IVA to creditors. Insolvency practitioners are actually accountants who are specially licensed to negotiate your IVA for you.
The IVA process – what happens next?
• Your insolvency practitioner will prepare a detailed IVA proposal for your creditors.
• They base the IVA on the amount you can afford to repay, and the amount of time over which you can afford to pay it off.
• Your practitioner files an ‘Interim Order’ to prevent creditors from starting bankruptcy proceedings against, or hassling you for cash.
• Your practitioner sends your Individual Voluntary Arrangement proposal to your creditors.
• Your creditors vote on it and either accept or reject your proposal. If 75 percent of your creditors agree, your IVA immediately becomes legally binding.
• Now, you begin paying back your creditors under the terms and conditions of your IVA. If you miss repayments or fail to pay you put yourself at risk of repossession.
• Once you have paid off all the debts under your IVA, the debts are legally cleared.
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