The benefits on hand with IVAs
Whether you've been struggling to keep up with mortgage repayments or have been unable to pay credit card bills, being in a high amount of debt is bound to be a difficult situation for anyone to deal with.
However, if you are faced with what seems to be an unmanageable debt burden as interest accrues and you are hit with late repayment charges you should be aware that it is possible for you to escape such difficulties and get on a firmer financial footing once more.
This can be done in a number of ways, but you may want to consider the advantages on hand by taking out an individual voluntary agreement (IVA).
An IVA is a formal agreement drafted up between the practitioner operating on your behalf and your creditors about how much money you owe and to whom.
From here, you will agree to make reduced payments on your debts over a specified period of time - usually around five years - in order to pay off a percentage of what is owed.
After this period, provided you have kept up with the agreed monthly repayments, the remainder of what is owed will be classified as settled and you should be free of the shackles of debt and able to move on with your life.
But this is just one benefit to such a form of debt management, there are a whole host of reasons why you may want to consider seeking IVA advice.
If you currently owe a significant amount to various creditors you could well find your postbox is flooded with bills and statements from companies demanding you pay them money which you just don't have, while your phone is ringing off the hook with calls asking when you will be in a position to make payments.
This will come to an end. Creditors will be legally-obliged to stop contacting you either by phone or post to demand their money and as such you could find this affords you some much sought-after peace of mind.
The fact an IVA is a fixed-term agreement also means you should always be aware of how much you owe, the scale of your repayments and how long it will take before you are out of the red.
As it is decided beforehand about how much you can realistically afford to pay back each month, you should find that you have enough income in order to meet other essential financial commitments such as utility bills, rent or mortgage payments and council tax.
You should also be aware that once the IVA is in put in place, all late payment charges and interest accrued to your debts will be frozen. As the overall amount of money that you owe will not increase any further, all subsequent repayments made will go towards reducing the overall amount owed, rather than just paying back interest.
After completing an IVA's repayment process you will be able to borrow money once more. This is in opposition to other debt options such as bankruptcy, so if later on in life you want to take out credit again - for instance through a personal loan - you should be able to do so and take steps to rebuild your financial rating.
An IVA may prove to be a particularly effective debt management solution if you are an accountant, doctor or in the armed forces. If you work in such professions, it could be possible that going for bankruptcy means you will lose your job. However, with an IVA this need not be the case. You will be able to continue working in the same job as before. If you're only just getting a firm handle on your debts the last thing you will want to be is out of work and without a steady stream of income.
In order to get an IVA, you will first have to meet a range of criteria. However, some of the most important factors that you should bear in mind are that you have to be in debt by at least £15,000 and that this money should be owed to three or more different lenders.
If you're keen to get back into the black then seeking out debt help from Moneyextra.com could be the first step to getting on a firmer financial footing.
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