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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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| Disadvantages
of IVAs |
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Enquire about
an IVA Now ! |
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An Individual
Voluntary Arrangement (IVA) provides various advantages
in comparison to the bankruptcy proceedings. However,
there are also some associated disadvantages of an IVA.
Some of the major disadvantages of an Individual
Voluntary Arrangement (IVA) are:
- A debtor
should have accumulated significant amounts of
unsecured debt so as to be eligible for an
Individual Voluntary Arrangement (IVA).
- An
Individual Voluntary Arrangement (IVA) debars a
debtor from obtaining any further credit during the
next five years. This is to limit the overall
liabilities of an insolvent debtor under IVA.
- A debtor
should have a suitable income or full time
employment so as to be able to pay regularly for the
Individual Voluntary Arrangement (IVA). A debtor
without any steady stream of income has to face the
bankruptcy proceedings.
- In order to
get approval, more than 75% of the creditors should
vote in favour of the Individual Voluntary
Arrangement (IVA) proposal introduced by the debtor.
This makes it necessary for the IVA to be acceptable
to a majority of the creditors.
- Another
disadvantage of an IVA is that a debtor can lose the
protection from bankruptcy if he fails to abide by
the terms and conditions of the Individual Voluntary
Arrangement (IVA) that includes missing out on any
Individual Voluntary Arrangement (IVA) payments.
- In case an
Individual Voluntary Arrangement (IVA) fails and the
debtor eventually falls into bankruptcy, the costs
of the Individual Voluntary Arrangement (IVA) are
added to the overall debt owed by the debtor. This
adds to the already precarious situation of the
debtor under an IVA.
- Each
Individual Voluntary Arrangement (IVA) is recorded
in a public credit register and can significantly
affect the credit rating of the debtor and any
chances of borrowing any money in the future.
- If a debtor
has entered into an Individual Voluntary Arrangement
(IVA) and subsequently gets a sudden windfall like a
win on a lottery, he is required by the law to pay
back all the money owed to the creditors.
If a debtor works overtime and manages to earn any
extra income he may be required by the law to pay half
the money to his creditors. This is covered in clauses
specified in an Individual Voluntary Agreement. |
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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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