The individual voluntary agreement can be said to be another name of the term individual voluntary arrangement. These plans and procedures were actually set up for dealing with the excessive bankruptcy and debt consolidation issues within the UK economy. This is one of the most beneficial options for dealing with bankruptcy which were really essential for the people who were in debt with a huge amount of money that seemed impossible for them to pay. The IVA is a legal document that is drawn up by a qualified insolvency practitioner who acts as an intermediary along with the debtor and the creditor. The practitioner will have an overall look at the financial condition of the debtor and as long as the income is exceeding the expenditure, there will be certain provisions which will be granted to the debtor to reduce the debt to a considerable extent without hampering the creditors’ interest and at the same time, paying off the debt within a certain period of time.
The time period is mostly fixed at five years, though it can vary in certain cases of individual debtors, but the usual time period is 5 years. The process is similar to a process in Scotland known as protected trust deeds. During the overall procedure of IVA, the creditors cannot make any contact with the debtors as long as they are paying off the scheduled amount at regular intervals. And in case the creditors try to take any forceful measure, they are liable to face stiff legal penalties. It must be noted in this scenario, the creditors need to agree collectively to the petition of the debtor and the total debt will be treated as lump sum instead of a series of debts for different parties.
A huge advantage of individual voluntary agreement is, a large chunk of money is wiped off from the overall debt at start and this helps in covering up as much as sixty percent of the money owed. This is actually what makes it a very attractive one. Now, you also need to know that just because the IVA offers an alternative for avoiding bankruptcy, this does not at all necessarily mean that the two procedures will be mutually exclusive. Once a person has been declared as bankrupt, they can still make a petition for the IVA. If they can get an arrangement for the IVA before the declaration of bankruptcy, then the individual is liable to apply for the annulment.
Again, if the IVA has been approved after the declaration of bankruptcy, the official receiver will be completely in charge of the arrangement. Though the arrangements are fully strict, this can be referred as fast track voluntary arrangements which are only available in certain circumstances. There are certain regulations which can prove to be definitely advantageous for a debtor, but if improper decisions are made, the same situation can turn into a disaster. This is the reason it is better to take the help of professionals like IVA Plan.