IVA’s can have a sting in the tail for creditors
Posted on July 22nd, 2010
Most creditors are happy to accept IVA proposals. This is because it is a compromise deal that ensures they get some of the money from the loan back, knowing that the debtor is likely to declare bankruptcy otherwise which would leave them with nothing.
Creditors are usually also aware that if the debtor fails to pay the IVA monthly payment at any time, they will be forced to declare bankruptcy. The only difference is that this time, the equity that would be forced from the debtors property would go to them. Although this is all good and well, often creditors do not think about the repercussions of letting renters use IVA’s as this policy only applies to property owners.
If a renter is unable to continue paying the monthly payments that were initially agreed they will not be required to declare themselves bankrupt. This is because it will result in the creditor receiving no money whatsoever. Therefore, the debt will be restored in full, with the inclusion of monthly late fees and heavy interest rates.
What usually happens in this situation leaves the creditor with nothing. If the debtor has any sense he or she will declare themselves bankrupt, creating a debt free situation without any serious repercussions that include becoming homeless. This loop hole is extremely annoying for creditors, however, it doesn’t happen very often.
Get complete Information on Debt , Debt Management and Debt IVA at Debtmanagement.org.uk
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