Shorter or Longer Term IVA's
The standard IVA is over a 5 year period. However in certain circumstances shorter or longer IVA?s can be provided.
Shorter Term IVA
A shorter term IVA would be done if for example you have a large disposable income left following an income and expenditure review.
This would mean that over the 5 year term (60 months) you would pay back substantially more than you owe which you are unlikely to agree to and also the creditors as it would appear that you are not insolvent.
What would be done on the statement of affairs would be to decrease the amount of monthly contributions to 48 months instead of the usual 60 months. This would then show that you would pay back a more reasonable amount but over a shorter term. The same principles would apply in that at the end of the 48 months any remaining debt would be written off and cleared although it is likely that you would pay back more or less what you owed.
Longer IVA?s
As well as decreasing the term of the IVA you can also increase it.
A longer term IVA would be done if you have a low disposable income left following an Income and Expenditure review. By increasing the term you would still be able to pay back the lower monthly contributions but over a longer term therefore paying more back making it more beneficial to the creditors.
What would be done on the statement of affairs would be to increase the amount of monthly contributions to 72 months instead of the usual 60 months. This would then show that you would pay back a more reasonable amount but over a longer term. The same principles would apply in that at the end of the 72 months any remaining debt would be written off and cleared leaving you debt free.
Creditor
Someone you owe money to.
Unsecured lending
Total loan & credit card debts excluding your mortgage and any hire purchase.
Country
The country you currently live in.
Insolvency Practitioners
Also known as an IP, a person who specialises in formal insolvency cases.
Valuations
The process of determing the current value of an asset.
Equity
The difference between the market value of a property and the claims held against it.
Lender
Someone you owe money to.
Eviction Order
A court order by which a person may be evicted.
Arrears
An unpaid and overdue debt.
Disposable Income
The amount of income left to an individual after taxes have been paid, available for spending and saving.
Statement of Affairs
A financial report showing assets and liabilities at expected liquidation values and shareholders' equity.
Insolvent
Unable to meet debt obligations.
Secured Loan
Money borrowed using goods or property as a guarantee.