Creating an IVA can be a cost-effective alternative to bankruptcy or insolvency. It enables borrowers to repay their debts over a set period of time. The process of establishing an IVA can involve meeting with creditors and submitting a proposal. Your creditors must approve your IVA proposal in order to be effective.
In a secured loan IVA, the lender will receive a certain amount of security to balance the risk of default. The lender may use this security as collateral to recover the loan. This security allows you to pay off your debts over a period of four to six months. In addition, an IVA process can be completed quickly and without court appearances.
The IVA process can include your unsecured debts. These are non-priority debts. This means that falling behind on them will not lead to the same consequences as falling behind on priority debts, such as legal action or even repossession. However, they can still lead to extra fees and damage your credit rating. In addition, the longer you leave a debt problem unattended, the more likely you are to end up bankrupt.
An IVA can be an effective method to eliminate your debt. It’s also an effective choice if you have multiple types of debt. For example, an IVA can save your home from foreclosure, so you can sell it and pay off the debts. Moreover, an IVA is a good option if your debts are too large for an unsecured loan.
The success of an ecured loan IVA depends on how your creditors respond to your proposal. A number of IVAs fail because debtors are unwilling or unable to make payments, or they refuse to accept reduced repayments. Nonetheless, an IVA can help you pay off your debts in a short period of time.
An IVA that includes a secured loan can be a better option than a remortgage. The IVA Standing Committee must decide whether the interest rate and the term of the loan are reasonable. If they decide that it is, they can propose a variation to creditors if necessary.
If you are considering an IVA, it is important to seek debt advice. The best option is to talk to a financial adviser, who will help you decide on the best option. They will review your debt level and income and expenditure and draft a repayment plan based on your affordability and ability to make regular payments. Insolvency Practitioners usually charge fees for their services, but these fees will be included in your monthly payment.
If you have equity in your property and are unable to repay your loan, you will have to apply for equity release. In most cases, this will require a secured loan or re-mortgage, and you will need to pay at least PS5,000 to release the equity. Fortunately, this method will enable you to keep your home and avoid selling it.