If you have started an individual voluntary arrangement (IVA) but are unable to continue the fixed payments, insolvency could be an alternative to resolve your debt trouble once and for all.
An individual voluntary arrangement (IVA) is a lawfully obligatory agreement with your creditors permitting you to settle unsecured debt over a fixed period of five years.
After decided, you disburse as much as you can to your creditors and at the end of the arrangement, any outstanding debt is written off.
1000′s of people use IVAs every month to resolve their debt problems. The majority are capable to continue their settled payments without any problem. However, if you are in an individual voluntary arrangement and your financial conditions change, paying the monthly instalments may become a trouble.
A change in circumstances
If you find yourself in a position where you can’t give to make your settled IVA payments, the first thing you should perform is talk to your insolvency practitioner (IP). This is the person who is responsible for managing the contract.
Your salary may have fallen, but if you can still remain to make smaller payments, your IP may request the creditors to accept a variation to your IVA.
A variation would agree to your monthly payments to reduce. However, to compensate for this, your creditors could inquire you to extend the length of period your IVA lasts.
If you are unable or unwilling to make any extra payments into your individual voluntary arrangement, you could stop paying in total. If you act this, then your IP will normally have to fail the arrangement.
At this situation your creditors are once again free to take act against you to collect their outstanding debt.
The bankruptcy option
One way of resolving your debt trouble if you can no longer pay your individual voluntary arrangement is to declare bankruptcy. For bankruptcy information please visit our web site. You simply have to wait for your insolvency practitioner to formally fail your agreement and after that you can submit a bankruptcy request to the court.
You should describe on your bankruptcy application form that you have made your best effort at repaying your creditors by using an IVA but unfortunately have been not capable to sustain the required payments.
Once bankrupt, all of your outstanding debts will be taken away from you and you will simply be required to make payments towards your debt if you can afford to do so. Even then these payments will last for a maximum of three years.
If you petition for your own bankruptcy, you will have to pay a charge of £600 to the court. One method of paying this charge is to save the money you will otherwise have paid into your IVA.
Are you a house owner?
If you are a home owner, failing your individual voluntary arrangement should be an absolute last option particularly if you have equity in your property
After your individual voluntary arrangement has failed, the insolvency practitioner has a duty to realise any equity you own in your property for the benefit of your creditors by making you bankrupt.
As a result your home might be sold except a family member or friend is capable to disburse to the court a sum equivalent to the equity which would otherwise be released.
If you have a debt problem, you should familiarise yourself about all of the choices available to assist. You should only start an IVA if you are sure that you may maintain the monthly payments.
After you have started an IVA, you might still decide to stop repaying and declare insolvency. Though, if you are a house owner, this should be an absolutely last option as you will be at chance of losing your house.
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