The ongoing global credit crunch has created a havoc among the debt thrift Britons. The availability of easy loans has become rare. And, the massive use of plastic money in the last years is forcing the Britons to suffer from the never ending vicious circle of Debt. In January 2008, according to the survey of the Leading financial daily Reuters, the per capita credit card presence was 2.9 in the UK and it is the highest among the developed economies of the world. The snowballing of credit card debt in absence of easier unsecured loan is leading Britons to a state of misery.
IVA as a measure of coming out of the debt trap
IVA or Individual Voluntary arrangement came into force after the insolvency act of 1986. The rationale behind this arrangement is to enable the debt-ridden borrower to have a way out from the debt trap with the help of a legal binding and easy repayment pattern(depending upon the income, repayment capacity and other obligations of the borrower).
How IVA helps?
IVA UK is a legal binding repayment pattern and the proposal is initiated by the Insolvency Practitioner on behalf of the debtor. The Insolvency practitioner contacts the creditors and informs them regarding the repayment plan. When 75% of the creditors agree to the proposal, the proposal becomes a legal binding agreement.
The advantages of IVA
1- The Creditors have no right to repossess the residential property of the borrower until the debtor maintains regularity in payment of the monthly installments according to the clauses of IVA
2- The debtor is declared debt free after the end of the agreement period even if he/she has not repaid the borrowed amount completely
3- IVA helps the borrower to improve his/her credit score
4- The debtor can take fresh loans during the agreement period
5- The identity of the borrower is not disclosed. So , it is viable option for the professionals holding public offices to become debt free without hampering their credibility.
