Although debt consolidation information is not so difficult to obtain, what might be difficult is the manner of understanding the term itself. Most often than not, the term is referred to as a loan; however, some financial experts also use it to describe a debt management program that reduces the overall debt of an individual and pays off all the creditors involved on a pro-rata basis for a certain period.
The most common form of debt management program that is also referred to as debt consolidation information is the Individual Voluntary Agreement (IVA). This program is specifically established to deal with the rising number of personal insolvencies. It is also considered a better option rather than going into bankruptcy. The primary difference between IVA and bankruptcy is that IVA needs a certain amount of money to be paid back without the debtor suffering from material discomfort while a bankrupt is discharged after 3 years although the debtor may have to give up everything he has.
Thus, debt consolidation information is accessible through conducting an IVA, which is done through a qualified insolvency practitioner. This is with great distinction from a salesman who only makes the debtor sign a loan document and obtain the commission. The IVA is considered a legal agreement between the borrower or debtor and the creditors. The terms for obtaining an IVA should be followed strictly. This is the reason why the qualified insolvency practitioner should evaluate comprehensively the income as well as the expenditures of the borrower.
At the beginning of the IVA, a borrower can obtain as much as 70% of the total outstanding debt to be completely written off. After which, the debts are apportioned equally between the creditors and reckoned to an amalgamated lump sum, which is payable each month. The borrower or the client has to obtain an income in order to meet this term among with other related expenses. The qualified insolvency practitioner will utilize the debt consolidation information in order to work everything out. As soon as such plan has taken place, it will be considered a legally binding agreement.
The creditors will no longer be allowed to threaten or harass the borrower again as soon as the plan has been made into a legally binding agreement. There should also be no contact between the borrower and the creditor as per the regulations of the IVA. After five to six years, the debt is assumed to be settled and the borrower or debtor can start anew. In this case, it is also assumed that regular repayments of the agreed sum have been made on time each month.
In order to be assured that you get the most reliable debt consolidation information, you should obtain it from a qualified insolvency practitioner of a firm. This qualified insolvency practitioner should be able to negotiate efficiently with your creditors so that you can have the best deal of reducing your overall debts at the beginning of the plan with the highest amount possible.
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