Many people are suffering with debt issues at the moment, and the current worldwide coronavirus issue is making this more and more challenging with people losing their jobs and the unemployment rate rising more and more each day.
There are a range of different solutions to help people to become debt free, however there are only two options which are government supported, one such option which has the legislative power to write off debt is the Government IVA (Individual Voluntary arrangement).
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What Is This IVA Which Can Write Off Peoples’ Debts?
The IVA (Individual Voluntary Arrangement) is a debt solution which enables people to make reduced debt repayments over a period of time, which reduces the burden on people to repay the entire balance of the debt, with the entirety of someones’ debt being renegotiated into a new payment plan, in which the person can repay only what is affordable.
How Can The Government IVA Write Off Debts?
The Government IVA has legislation from the insolvency act 1986 which enables an appointed representative (insolvency practitioner) to renegotiate debt repayments over a period of time, not only this, but after the period of 60 months, the remaining debt left over is written off and there are no longer any repayments due into the IVA (the debt is considered settled.).
The debt is written off as an extended function of the IVA, it has legal support from the authorities and is recognized by the UK Government, therefore it cannot be contested in court unless the terms of the IVA are broken (which usually takes place in the form of a default or a non-payment by the debtor).
How Much Debt Can Be Written Off In An IVA?
There is no numerical limit as to the amount of debt which can be written off in an individual voluntary arrangement, and more than 85% of debt can be eliminated and wiped clear once the IVA is completed.
Are There Other Ways In Addition To The IVA To Wipe Debt Clear?
Bankruptcy is another solution for people who are struggling with debts, however this is not recommended for people who have an income, because the IVA enables people to avoid many of the unpleasant side effects of bankruptcy, such as the advertising in the London gazette, and the devastating effects that bankruptcy has on an individuals’ credit rating.