Debt restructuring (IVA), debt relief (DRP), and balance
transfer programs are all solutions for debtors. However, the three solutions
are quite different. Some are different in amount, some need to alarm the
court, some schemes do not allow applicants to hold credit cards, and also need
to use half of the monthly salary for repayment. Next, Money Smart will explain
the differences in detail for everyone.
Debt
restructuring: more than 500,000 debts apply for public records
Debt restructuring (IVA), also known as Individual Voluntary
Arrangement, requires an application through legal procedures. The biggest
reason for applying for an IVA is that the debtor cannot repay the debt in
accordance with the original debt regulations. Therefore, he hopes that the
debtor will consider his situation and negotiate with the creditor a new
repayment plan, including reducing the interest on the original debt or
renewing the repayment period.
IVA is suitable for people who owe more than $ 500,000 and
are on the verge of bankruptcy. For creditors, IVA has greater incentives to
make debtors pay off debts and allow debtors to recover their debts, which is
better than debtors applying for bankruptcy and bad debts.
The law requires a debtor to find a nominee to assist with
matters related to IVA. Nominees need appropriate experience and qualifications
recognized by the court, usually accountants or lawyers. The debtor is required
to make an initial deposit of $ 12,150 to the nominee to cover the costs,
expenses and remuneration incurred by the nominee in connection with the
voluntary arrangement.
Then, the nominee will submit a report to the court,
explaining the assets and liabilities of the debtor, and convening a creditor
meeting to discuss and re-establish a new repayment plan with the creditor. The
court will then issue an order according to which The new plan paid off the
debt completely.
IVA processing time is up to 4 months, and anyone who
successfully applies for IVA will leave a public record. In the special
register of the Bankruptcy Office, the public can view the relevant records.
However, if the debtor fails to apply for an IVA and fails to reach a consensus
with the creditor, there is a good chance that the bankruptcy will end.
Debt relief: can't hold credit card
without leaving public records
As for Debt Relief (DRP), it is a simplified version of IVA
and does not require a court application to restructure debt. The debtor can
negotiate with the debtor on his own to reach a new repayment plan, including
reducing interest rates or repaying the repayment period; he can also find a
lawyer to formulate a repayment proposal, detailing the debtor's assets and
liabilities, and contacting the debtor Consultation, the whole process takes 2
months.
DRP is suitable for people with low debts. Some banks or
financial companies have DRP departments to arrange debt reorganization for
debtors. At the same time, they may assist debtors to discuss new repayment
schemes with other creditors. The advantage of DRP is that it will not leave
public records and protect the privacy of debtors.
Debt
restructuring and debt relief need to pay off debts at half the monthly salary
Regardless of the IVA or DRP application, the debtor cannot
keep the credit card. Generally, half of the salary is required for repayment
every month, and the debt needs to be paid off within 3 to 5 years. The process
of applying for IVA or DRP is not easy. There are social welfare agencies
including Caritas providing financial counseling telephone hotlines to Qingxuan
and Tung Wah Group of Hospitals to answer questions about IVA or DRP for
debtors.
Balance
transfer plan to pay down debt at a lower interest rate
As for the balance transfer plan, it is a loan product of a
bank or a financial company. The financial and financial institutions will
issue new debt with lower interest rates to repay the debts owed to the debtor
with higher interest rates. New low-interest debt. The balance transfer program
is generally suitable for those with strong repayment ability and light debt
burden.
After all, don't want to be on the verge of bankruptcy due
to debts. Everyone should keep in mind the prudent consumption habits, and
consider your repayment ability before borrowing. In short, "Borrow to
borrow? Also get borrowed first!"
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