What Happens If I Breach My IVA Agreement?
Individual Voluntary Arrangements (IVAs) are a legally binding agreement between you and your creditors, designed to help you repay your debts over a set period of time. They are a popular debt solution for people struggling with high levels of debt, but what happens if you can`t keep up with your IVA payments and breach your agreement?
Firstly, it`s important to understand that breaching your IVA agreement can have serious consequences. Your IVA is a legally binding contract, and if you breach it, your creditors could take legal action against you. This may result in your IVA being terminated, and you could be made bankrupt.
If you breach your IVA agreement, your Insolvency Practitioner (IP) will contact you to discuss the situation. They will try to help you get back on track with your payments and prevent the IVA from being terminated. However, if you are unable to meet your IVA obligations, your IP may recommend that your IVA is terminated and you are made bankrupt.
If your IVA is terminated, you will lose the protection it provides you against legal action from your creditors. This means that your creditors could start legal proceedings against you to recover their debts. This could result in you being forced to sell your assets, such as your home or car, to repay your debts. In addition, bankruptcy will remain on your credit record for six years, which may make it difficult for you to get credit in the future.
It`s important to note that breaching your IVA agreement doesn`t necessarily mean that it will be terminated. Your IP will work with you to find a solution that allows you to continue with your IVA if possible. This could involve changing your payment plan to make it more manageable, or negotiating with your creditors to reduce the amount you need to repay.
If you are struggling to keep up with your IVA payments or you think you may breach your agreement, it`s important to speak to your IP as soon as possible. They can help you come up with a plan to get back on track and avoid the serious consequences of breaching your IVA.
In conclusion, breaching your IVA agreement can have serious consequences, including bankruptcy and legal action from your creditors. It`s important to work closely with your IP to find a solution if you are struggling to keep up with your IVA payments. By taking action early, you can avoid the worst-case scenario and find a way to manage your debt.
