IVA time bomb
Debt Category: IVA (Individual Voluntary Arrangement) Help and Advice
Thousands of people are facing an IVA time bomb.
Under the terms of an individual voluntary arrangement, some of the value of their properties has to be released to put towards paying off debts.
However, the new loans they must take out will probably be at higher rates than their existing loans because of tightening lending criteria due to the credit crunch.
To compound the misery they will probably be re-classified as ’sub-prime’ customers and be charged even more.
An IVA is an arrangement whereby the lender agrees to a repayment plan with some of the debt written off.
All IVA’s contain a clause saying that the borrowing for the equity release must be ‘affordable’.
If it can be proved by the borrower that this is not the case then the lender must write off that portion of the debt.
Andrew Smith, marketing director with leading debt advice company ClearDebt, told thisismoney.co.uk: "Banks have agreed to take this on the chin."
Critics of IVA’s have said that it has been made easier for people to run up a debt knowing that at some stage they could well have part of it written off.
For more information on IVAs call our advisors on 08000 122 118 for FREE, no obligation help and advice.
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