To
qualify for this service you must:
- have debts of at least £20,000;
- pay back to your creditors 5% of your debt;
- have income and expenditure within the guidelines
laid down by representatives of the creditors (or
your IVA could fail).
Advantages of an IVA
- Creditors agree to wipe off up to 95% off your debt.
- Your creditors are no longer able to contact you
by letter or telephone or take any further action
against you.
- Your interest will be frozen and no charges will
be made against any of your accounts.
Debts that can be dealt with range from unsecured
loans, council tax arrears, Inland Revenue, business
rates, personal loans to friends and family, but you
cannot apply for an IVA on secured debts.
Apply
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What
the creditors expect from you
- You must fully disclose all of your debts and assets
- You must pay back to your creditors at least 25%
of your debt within the 60 months.
- You do not take out further secured or unsecured
credit for the full term of the IVA and for up to
2 years after.
You must inform your creditors of any assets you have,
for example, caravans, savings or equity from your property
after the 60 month IVA term.
Example
Monthly payment =£150
Total debt =£19,500
Monthly payment £150 x 60 months = £9000
=25% of debt paid off
Leaving = £10500 = 75% of debt wiped off
At the end of 60 months, you are completely debt free.
If you have a property you can work out your equity
you would have to release to the IVA by following this
example.
house value = £65000.
mortgage balance + any secured loans = £52000.
value £65000 x 85% = £55250 minus balance
of mortgage £52000 = equity = £3250
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