If you have fallen behind on repayments on a secured loan and are unable to make them, you may be interested in applying for an Individual Voluntary Arrangement, or IVA. This is a debt repayment plan where you make monthly payments to the lender. Once the IVA is complete, any remaining debts are written off. An IVA can be structured as a monthly payment plan over a set period of time, or as a lump sum that you pay over a certain period of time. Some IVAs combine both types of repayment plans, and some are a combination of both.
When applying for an IVA, you may be unable to obtain a loan from a traditional lender, so you must use a specialised provider to find a suitable loan. Specialised lenders offer bad credit borrowers loans, and can only be accessed through lending advisers or lending brokers with access to the whole market. The benefits of an IVA include the opportunity to settle early if you are able to make the payments. This allows you to rebuild your credit score, as an IVA will stay on your credit file for six years.
The IVA process is complicated. The IP drafts a proposal and sends it to all your creditors. Your creditors then vote to accept the IVA. You must ensure that they hold 75% or more of your total debt. If this doesn’t happen, you may need to look for alternative solutions. While an IVA is a great option for some people, you should remember that it will affect your credit rating in the medium and long term. As with any type of bankruptcy, your ability to access credit will be impacted for a long time. If you are a homeowner, you may have to release the equity in your property to make these payments.
An IVA can be difficult to get approved for if the debtor owes more than they can repay. Many lenders will refuse to give an IVA to people with over-extended debts. To get an approved secured loan, you must make sure that the mortgage on your property is worth at least 85% of its market value and that you can afford to pay off the loan. Having an IVA in place can make repayments more affordable and less stressful for you.
The IVA is a much more viable option than filing for bankruptcy. It will also protect your essential assets from unsecured creditors. The IVA also allows you to keep your home, as you can keep the equity in your home and avoid having to sell it in order to pay creditors. You should consider the benefits of an IVA if you are struggling to make payments on your mortgage. So, how can an IVA work for you?
First, an IVA will protect you from repossession. If the creditor does not want to wait for the IVA to take effect, they can file for bankruptcy. But, an IVA will prevent them from taking legal action until the end of the process. If you have a joint loan, the IVA Nominee will be able to apply for an Interim Order to stop all legal action until the creditors’ meeting.