IVA is short for Individual Voluntary Agreement.
An IVA is an agreement offered to lenders by the creditor as an alternative to bankruptcy. It proposes the amount of debt that the debtor is willing to pay every month based on his or her financial situation. it benefits both the creditors and the debtor because the creditors will be able retrieve some of their funds and the debtor does not have to ruin his or her credit for ten years as with a bankruptcy.
Neither the debtor nor the creditors have to accept an IVA proposal. The initial draft is just an idea of what the debtor can offer to each of his or her creditors. If a creditor is not happy with the proposal, it can deny the terms and request renegotiation. The borrower may also do the same. That way when it is all said and done, the agreement will be one that everyone can live with.
Once the parties go to court and the IVA is ruled legal by a judge, then it is a binding agreement. The consumer must remit all payments that were promised in the paperwork. If he or she fails to remit payment, a judgment may be entered against him or her.
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