What Is an IVA?
An Individual Voluntary Agreement (IVA) is an agreement with your creditors to write off the debt. IVA is a legal agreement and your creditors are bound by the law to not take any action against you to pay all the debts. IVA gives you a cushion to get rid of some of your debts. You cannot write off all of your debts. For instance, if you owe $100, 00 to your creditors, then you may be able to write off $20,000 through an IVA. If your IVA is approved, this is your legal right to not pay the $20,000 to your creditors in the above-given example. You have to pay $80,000 to the creditors.
Is IVA a Bankruptcy?
IVA debt is a type of insolvency but it cannot be termed as bankruptcy. Actually, bankruptcy occurs when you are unable to pay your creditors at all. Bankruptcy is the last option to pay back your debts. However, IVA is a voluntary agreement and it does not mean that you cannot pay back the debts at all. Bankruptcy is a state of business affairs where a legal action is taken against you; on the other hand, IVA is an action that is initiated by you. In an IVA, it is your discretion which of the assets you will include for sale in the proposal. Nonetheless, bankruptcy will sell all of your assets.
Is Getting IVA Beneficial?
There are different speculations about getting an IVA. Getting an IVA can be beneficial for one person and it may be a poor deal for the other person. Getting an IVA involves benefits and a set of risks. If you are in a real financial trouble and you don’t want to become bankrupt, then you can opt for an IVA. It will give you benefit. Inversely, if you are not in financial trouble and you still get an IVA, it may damage your credit scoring. Therefore, opting for an IVA is very crucial. The best way is to get in touch with an expert.
Who Will Help Me to Get an IVA?
If you are facing somewhat financial inconsistencies, you can hire an insolvency practitioner. Your insolvency practitioner will examine your financial position in detail. He will advise you whether to apply for an IVA or not.
Your insolvency practitioner will prepare a proposal for your financial position. He will decide what amount of the debt that you are unable to pay and which of the assets you have to sell. This proposal will be presented in front of the creditors and court.
Can I get IVA in any Case?
No, it’s not 100% sure that you’ll get an IVA. It is the sole discretion of the creditors to approve or not. Creditors will call a meeting and they will assess your proposal. If they see that you may become bankrupt in the future and this is the best time to settle a deal, they may approve your IVA.
If you prepared an IVA that is only for your interest, creditors may reject the proposal. They may ask for some amendments. 75% of the creditors must vote in your favor to approve the deal. After the approval, creditors who voted against you are bound to stick to the approval by law. They cannot take any legal action against you.