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What is an IVA?
Individual voluntary arrangement is a modern method for the settlement of debts. Particularly when bankruptcy is near about, IVA can avert it.
Terms of are IVA are settled according to mutual agreement between both the parties (creditor and debtor). There is no fixation what IVA is going to bring for a person who is heading towards bankruptcy. But one fixation is certainly there that IVA is going to bring more flexibility than the proceeding to bankruptcy.
Mostly under an IVA the creditor/s become agreed to take a lump sump amount towards full and final settlement of the debt. What will be the amount of an IVA depends upon many factors. Home equity, available funding and personal status of the debtor plays vital role while deciding the final payment under an IVA. Under IVA the amount is certainly less than the amount which should be paid in installments of debt. Bankruptcy brings embarrassment and deteriorates goodwill. IVA can be a protection against such sort of situation.
For what reason an IVA is accepted?
It is very obvious question about IVA. Since proceeding of IVA are started by a debtor his acceptance is certainly there. Creditors provide their acceptance because they know bankruptcy proceedings involves many hassle and expenses.
As a result bankruptcy most of the time fetches less money than an IVA. Moreover they are getting the amount without any hassle in lesser time. IVA proceeding takes six weeks to one years of time. Bankruptcy proceedings take far much than that. Settlement through IVA saves time and money both.
Legality of IVAIVA proceedings are performed by an insolvency practitioner. In the formal meeting with IP, if creditors are agreed to a certain amount as full and final settlement of debt then it becomes legally binding for them to accept the same amount. But the debtor must observe the decided time period. |
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