An IVA is a debt relief plan for homeowners. The main requirement is that the homeowner has equity in their property. However, this does not mean that they must sell their home. Instead, they can continue making their monthly IVA payments and avoid the need to look into re-mortgaging or taking on an expensive secured loan.
An IVA must be approved by 75% of the voting creditors, known as ‘creditors by value’. This means that the creditors owed the most will likely vote against the proposal. It’s also possible to haggle with creditors over terms of the IVA. For example, they may ask for more money, to include their assets, or to extend the payment period.
Once an IVA has been approved, it is important to follow the guidelines set out by the IP. The IP will ask why the borrower wants to take out a loan and will discuss all options with them. It is also important to comply with the restrictions of the IVA to ensure the smooth functioning of the plan. If a borrower is unable to adhere to the rules, the IP may end their IVA or take legal action against them.
While an IVA does not get rid of the debt, it is important to understand that it can provide access to large amounts of credit to people in need. Putting up property as security for debts is also a good way to access credit. However, failing to pay off creditors can negatively affect a person’s credit history.
Those with equity in their home can also benefit from an IVA. However, they should avoid borrowing from friends and family because it can compromise the progress of the IVA. Furthermore, it will upset other creditors, making it difficult for the process to go through. Moreover, homeowners may have to remortgage their home during the final year of an IVA. The IVA process takes into account the value of a home, and the final valuation will determine the amount of equity a person has in their home.
As a debtor, you may have a higher monthly payment if you have an IVA that involves a secured loan. This is due to the fact that payments on a secured loan are often included in the expenditure calculations. However, if your house is being repossessed, this would leave you with unsecured debt that cannot be included in an IVA.
Once you’ve signed an IVA, you need to tell your IP if your financial situation changes. This is important because if you’re no longer able to make your monthly payments, you may have to modify your plan and go through the court process to get it re-approved. If your creditors refuse to accept your reduced payments, your IVA will fail.
You should make sure to check your IP’s terms of service before signing the agreement. Check their fees and IVA protocol. You can also shop around to get the best deal.