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IVAs or IVA loans were introduced to provide an alternative to bankruptcy.
The types of debts dealt with by IVAs can include personal loans, credit card balances and other forms of “buy now, pay later” unsecured loans.
An IVA is a legally binding contract between a debtor and his or her creditors.
It allows a person to make a formal proposal to settle a debt within a reasonable and fixed period of time. The contract is typically for five years.
An insolvency practitioner (IP) will help put the proposal to creditors and negotiate an agreement. The debtor will have to disclose full details of his or her financial circumstances.
If more than 75 per cent of the creditors accept the terms of the proposal, it is binding on all the creditors. Creditors can put forward changes to the proposal but the debtor can decide whether or not to accept them.
Any interest and debt charges will be frozen and creditors are not allowed to demand additional payments. The debtor will make monthly payments, usually a minimum of £200, to the IP based on what it is agreed the debtor can afford. Once the final payment is made, any remaining debt is legally written off.
Getting a loan against your pension
After entering in to an IVA (Individual Voluntary Arrangement) you will be finding it difficult to obtain credit from anywhere.
But at some loans companies, there is always a way out – you just have to do your home work the right ways and look for considerably good and reliable loan company that can help you in your situations.
Meanwhile, you have to be very careful because some loan companies can bank on your situations and probably add more to your problem by getting you to sign up for loan at exorbitant rates. This could further compound your situation if care is not properly taken!
How to qualify for and IVA loans?
To qualify for a IVA loan your pension must be a scheme that has been approved by HM Revenue and Customs. The majority of UK pensions are approved by HMRC for tax relief.
If you are unsure if you qualify please contact the loan companies first so that one of their pension consultants will be able to explore all the options available to you.
How does IVA loans work?
Some of the loan companies can help you obtain a loan up to 50% of your current pension fund. You will keep your pension and it will remain in a FSA approved pension scheme that is approved by HMRC for tax relief.
You do not need to repay your IVA loan until you take your retirement benefits, the loan will be repaid from your 25% tax free lump sum.
They can also arrange a pension loan if you have been discharged from bankruptcy within the last 18 months. There is usually no upfront payment and no payments to make until you retire.