Oftentimes, people can find themselves drowning in debt; it can ruin their lives and it might be too much for them to handle. Fortunately, you can manage your debt in easier and more convenient ways; one of these ways is applying for an IVA.
So, read on to find out more about IVA in case you are considering getting one.
What Is This Legal Document?
This is a financial and debt management deal; Individual Voluntary Agreements can save people who are immersed in debt and can’t get out. People who can’t continue paying for their monthly debts will have them written off, freeing them from the shackles and helping them live secure and debt-free lives. Your creditor is legally bound by it and wouldn’t take any legal action against you.
How to Get Qualified
This legal agreement between you and your creditor needs an insolvency practitioner to get it all started smoothly; you’d need a minimum debt of £5000, but it depends on the case because there are rare occasions where someone got one with lower debt than that. Just remember that if you’re residing in the UK in Scotland, you’ll need a trust deed instead, because IVAs are available for citizens in England, Ireland, and Wales. Debt advisors at https://www.scottishtrustdeed.co.uk/apply-for-an-iva/ state that your insolvency practitioner would set up a payment plan that is affordable and far better than any alternative, making your debt written off and cleared after an agreed-upon number of years. So, trust deeds and IVAs are similar; you just need to be smart and accept the aid to convince your creditors to agree with signing it.
Do I Need a Job to Get It?
This is a good question. Even though having a job would make things easier, an unemployed person can, legally, apply for an IVA. However, you will need a way of gaining income, whether it’s from benefits, pensions, a contribution from someone, or an investment with passive income. It’s crucial to have this income so you can keep paying for it. Having a regular income means there won’t be any problems in paying the monthly installments. Failure to do so will sabotage your efforts to get the IVA; remember to discuss these aspects with your insolvency practitioner.
What Documentation Do I Need to Provide?
Like any other legal document agreement, it needs some evidence from you to get the process started properly. You’ll need to provide them with your ID and proof of identification, payslips of the last three months, if possible, a recent statement of your total debt, and three bank statements from the past three months too. This should make things a lot easier for your PI and advisors to handle the technicalities of the agreement.
Can I Qualify If I’m Self-Employed?
Legally speaking, this can be allowed; if you get the income and ability, then there shouldn’t be anything to stop you from applying as a freelancer or contractor. But there are some things that you need to consider; you might find it difficult to get the creditor’s approval because of the fluctuation of your earnings. So, you have to come up with a plan and provide evidence of your income to get them to approve; this is important because you don’t want to live in debt forever.
Will My Boss Know?
You can rest assured that no one would ever know unless you talk to them about it; employers can’t know for sure because, when taxes are being processed, your PAYE tax code would stay the same. This is perfect because you can dodge any stigma and people wouldn’t think you’re doing something wrong.
Can It Affect My Credit Score?
Unfortunately, yes, it will change your rating; these debt management plans would be displayed on your credit file for about twelve months after your IVA is over. This shouldn’t make you worry, though, because all of this can be handled later and you can still raise your score; all you have to do is pay the monthly installments on time
It’s amazing how there is a debt management method that can write it all off once things get too tough for you; you would be off the hook and not save a lot when you physically cannot pay for it anymore. Insolvency is a terrible thing to have, but you can make the most out of it and get a decent deal with this agreement. You won’t have to file for bankruptcy and you get to keep your reputation intact.