The ABC of individual voluntary agreement

Stock Photo An IVA is a legally binding agreement between a person and his creditors and helps the debt ridden person to make a formal proposal to settle the debt burden. Once the agreement comes into force, monthly payments for the outstanding debt is fixed on an affordable disposable income of the person. When the final payment is made, the remaining debt(if any) is legally written off. The arrangement can write off up to 65% of the total debt burden depending upon the circumstances. One of the important aspect of the agreement is full and final IVA. In this case, a lump sum amount is paid to creditors while the debtor is in the process an IVA. This process is often used when someone has no significant disposable income to offer their creditors on monthly basis but can afford a lump sum that is less than the total original debt. The creditors usually accept the lump sum payments and go for final settlement as the creditor has no means to carry on paying and no other funds. read more