FAQ - Debt
1. What is an Individual Voluntary Arrangement (IVA)?
An IVA is a legal agreement drawn up between the person(s) in debt (lets assume this is you), all creditors to whom money is owed (banks, credit cards etc) and a Licensed Insolvency Practitioner. It is a legal process by which your unsecured creditors cannot pursue you for payment of your debts outside of the agreement.
In an IVA you agree to pay a single, reduced, affordable, monthly payment for a period between 3 and 5 years after which the unpaid part of the debt is written off by the creditors. The creditors are aware of this and are in agreement with it.
Each creditor gets a share of the monthly payment, usually in year 3 and year 5 of the arrangement, so no payments are made to individual creditors on an ongoing basis.
During the repayment period all interest charges are frozen and all demands for money are stopped.
The arrangement is drawn up by the Licensed Insolvency Practitioner who then administers the arrangement.
2. What is bankruptcy?
Bankruptcy is essentially a declaration to your creditors that you cannot afford to repay your debt . Once a bankruptcy order has been made your creditors will not be able to contact you directly again. New regulations in bankruptcy effective from the 1st April 2004 will allow for automatic discharge from bankruptcy within 12months. You will be required to make payment towards bankruptcy debts for a total of 3 years after the bankruptcy order has been made.
