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| Advantage 1 of IVAs |
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An IVA provides
protection to an insolvent Debtor
All the unsecured
creditors who are party to an Individual Voluntary Arrangement
(IVA) are bound by the terms and conditions of the insolvency
contract. Since the views of only the voting creditors are
followed, an unhappy creditor cannot take any legal action or
other enforcement to recover a debt but can submit a claim to
the IVA supervisor and get the dues as per the conditions
specified in the IVA contract.
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| Advantage 2 Of IVAs |
An IVA is less
expensive to undertake
Another advantage of an IVA is that it is significantly
less expensive in comparison to a bankruptcy because the
Insolvency Practitioner is not required to deposit funds in
the Insolvency Services Account as in the case of bankruptcy
proceedings against the insolvent debtor. In case of a
bankruptcy, the funds deposited in the Insolvency Services
Account attract levies and an ad valorem charge of 17% on all
deposits made after the initial £2,000.
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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
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| Individual Voluntary Agreement |
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Enquire about
an IVA Now ! |
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An Individual Voluntary Agreement is a
contract used by a debtor to avoid bankruptcy proceeding
against him in case of an inability to pay back the debt
to his creditors. Individual Voluntary arrangements were
introduced in the UK under the Insolvency Act of 1986 to
allow a debtor to avoid bankruptcy proceedings and
provide an alternative mechanism to take care of
insolvency. An Individual Voluntary Agreement is a
contract between the debtor and the creditors that
outlines the terms for repayment of an outstanding debt.
A debtor can avoid bankruptcy by entering into an
Individual Voluntary Agreement with his creditors under
mutually agreed upon terms and conditions that are
clearly specified in the contract.
Bankruptcy proceedings against a debtor
are quite lengthy and tedious and are best avoided by
the debtor as well as the creditors. In this context, an
Individual Voluntary Agreement provides an alternate
option to both the contractual parties for settling
their dues in a fast and effective way.
Before entering into an Individual
Voluntary Agreement, the process involves calling a
creditors' meeting to discuss the various provisions of
the contract. The meeting is supposed to be attended by
all the creditors and a voting process is followed to
decide on the acceptance or rejection of the proposal
submitted by the debtor in the form of an IVA contract.
For a general acceptance of an IVA contract, more than
three-quarters of the creditors present at the meeting
should vote in favour of the proposal. If any of the
creditors present in the meeting are associates
(friends, relatives or accomplices) of the debtor, then
at least half of the he remaining (non-associate)
creditors should vote in favour of the proposal for it
to be considered accepted by a consensus among the
creditors.
An IVA contract can be custom-made to
suit the individual requirements of a debtor. This makes
an IVA contract highly flexible in nature compared to
bankruptcy proceedings that are very lengthy and tedious
for the creditors in general and the debtor in
particular. Due to the inherent advantages of entering
into an Individual Voluntary Agreement, more and more
debtors are opting for it to settle their debt with the
creditors thereby avoiding any bankruptcy proceedings
against them. |
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| Advantage 3 of IVA |
No Stigma attached
with an IVA
An Individual Voluntary Arrangement (IVA) is a personal
agreement between a debtor and the creditors. A Bankruptcy, on
the other hand, is publicly advertised in a local newspaper
and the London Gazette. In this way, an IVA does not carry the
stigma associated with a bankruptcy. |
| Advantage 4 of IVA |
No dearth of future
credit
Unlike a Bankruptcy, the advantage of an IVA is that it does
not compulsorily restrict a debtor from obtaining any future
credit. A bankruptcy debars an individual form having access
to credit for a specified period of time. This provision makes
the bankruptcy proceeding all the more painful because the
credit history of the debtor is blemished forever. However,
there are no such issues in case of an Individual Voluntary
Arrangement. A debtor can get credit without any restrictions
even after signing an IVA |
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