What does IVA mean?
APR, CCJ, IVA … all these different financial terms can get a little confusing. I am in the proccess of compiling a debt jargon dictionary, as there seems to be a number of debt related terms that are quite confusing to the average Joe. Today however, in more detail, i will explain what the term IVA means.
An IVA is short for an Individual Voluntary Arrangement, which is a legally binding contract both you and your creditors. These are often popular with individuals in very severe levels of debt. The IVA is set up to help you reduce the amount of money you have to pay back on a monthly basis, so for some individuals it is a viable way to pay back their debt.
As lenders are keen to get back money that is owed to them, often they will be flexible on payment terms to ensure that some money is paid back, rather than none at all. These payment terms can vary on size and duration, but is usually around 5 years. The IVA is agreed between your creditors, and a repayment plan is adapted to suit your current lifestyle and circumstances.
When individuals are in severe debt, they are faced with a decision - filing for bankruptcy or an IVA, so it is advised to seek professional help if you are unsure on the diferrence between the two.
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