With so many complicated terms being used, the world of IVAs can be a confusing place. That's why we’ve compiled a list of some of the more common ones...
- Asset
- An asset is property that belongs to someone. It can be split into real property (buildings and land) and personal property (things such as vehicles, jewellery, cash and stocks & shares).
- Credit History
- This is a record of somebody's past borrowing and repayments and will include details of late payments. It is used to calculate one's credit rating.
- Credit Rating
- Every UK resident over the age of 18 has a credit rating. It's also known as a credit score and is used by finance companies to establish how financially stable an individual is. It is based on your credit history and also uses data such as your age, marital status, job, employment status and how long you’ve been with your current bank.
- Creditor
- A creditor is somebody who is owed money by another person.
- Equity
- This is the value of a person's real property after all charges and liens have been deducted.
- Insolvency Practitioner
- Often known as an IP, this is the specialist who is licensed to set up an IVA.
- Interim Order
- If you're intending to set up an IVA, an interim order can be granted by a court to halt bankruptcy and legal proceedings.
- IVA
- This stands for Individual Voluntary Arrangement and is a formal debt repayment plan. It's often a great alternative to bankruptcy and can see up to 75% of your debts written off.
- Lien
- A lien is a type of security interest that's granted over property to ensure the payment of a debt.
- Repossession
- If a creditor has not been paid the money they owe, repossession could be an option. This will involve taking items belonging to the debtor and selling them in order to pay off some of the debt.
- Secured Debt
- This is a debt where the creditor holds the debtors property as collateral. If the borrower can't pay the money that's owed, the property can then be sold by the creditor to recover the money that's due.
- Unsecured Debt
- This type of debt includes medical bills and the money owed on credit cards. It is not guaranteed against the property of the debtor.
