IVA Loans

Introduction to IVA Loans

The recent state of the economy matched with high unemployment has left many of people unable to pay their debts in full. What people used to be able to afford, they are no longer able to make enough money to cover all of the expenses. Some bills like utilities, food and gasoline cannot be eliminated because they are needed to survive. This leaves many people with no other option but to stop paying their creditors and this allows the bills to just keep adding up.

There are several different types of options available to help consumers deal with this ever growing problem. The Insolvency Act of 1986 created the option of IVA or individual voluntary arrangement to be used to help debtors and creditors work out an agreement for payment. The purpose of this plan was to eliminate the need for some to go through bankruptcy court. To be eligible for this type of arrangement, you must be able to make the monthly payments. This arrangement should not be confused with IVA loans.


How Does an IVA Work

These agreements are made during a creditors meeting where all of the creditors meet with you to try to iron out an agreement of what the final payment and payment arrangements will be. The creditors will want to make it as high as possible to recover as much of their money as possible and you will want to keep it as low as possible so you can afford it. It takes some time but eventually a plan is usually settled upon and payments are set up. Usually, the creditors will want you to agree not to engage in any IVA loans throughout the process.

Once the payment arrangement has been made, you will need to set up a special bank account that can be used to pay the IVA payments. This account will be used to put money in and out of to pay your balance off. It is essential that you pay on time every month because if you miss a payment then the whole arrangement can become voided. If this happens it is more than likely that you will be heading to bankruptcy court.

IVA Loans

Any IVA loans that you may consider applying for to pay off part of your balance due is heavily frowned upon. The creditors will have just lost money through the process by agreeing to settle with you at a lower price and they will not like the idea of you getting into more debt. Although there is a legal regulation against obtaining a IVA loan after the arrangement is completed, some arrangement will include this stipulation within the agreement. Obtaining an IVA loan is probably not a very good idea in any case since the IVA arrangement will have just got you out of debt. Simply paying your monthly payments until you are more financially stable is the much better option to choose. After you are able to increase your income to a good level and have a backup plan, you may be able to consider a loan.

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