When You Should Consider an IVA
If you are having debt management problems and need to pay back creditors that you owe then you’ve probably considered getting an IVA at some point. But this financial tool is not needed by everyone. So when is it that you should consider taking on an IVA?
What Is an IVA?
An IVA is also known as an Individual Voluntary Agreement. It is a legally binding agreement between you and your creditors that normally lasts five years. During the time of this agreement, you are expected to pay back a debt that you owe to the creditor by making installments that you can afford outside of reasonable living costs.
The IVA is something that must be set up by a licensed professional called an Insolvency Practitioner (IP). All unsecured debts that you owe must be declared into an IVA.
Do I Need an IVA?
So how do you know if it is time for you to consider an IVA? First, you want to look at whether you’re having financial difficulties that don’t allow you to repay a creditor on your own. Since the IVA is a formal proposal to settle your unsecured debt within a reasonable timeframe, it’s good to take this route if you know you can’t do it on your own.
One great reason to consider the IVA instead of paying back the debt without this proposal is that you get to freeze all interest and charges to 0 percent during this time. Also, creditors will be prohibited from demanding additional payments, making the repayment process easier for you.
Repaying your debts is always the responsible thing to do. So if you need help organizing your repayment plan and want to take advantage of having your interest and charges frozen then it may time to for you to consider creating an IVA.
This was a guest post by SeattleBankingRates.com, a site that provides daily updates on the latest Seattle mortgage rates, finance information and more.
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