What Is A CVA? Company Voluntary Arrangements Explained

A CVA (or company voluntary arrangement) bears many similarities to an IVA (individual voluntary arrangement) but as the name suggest is a method that is open to companies rather than individual people. This legally binding process allows a company or organisation to create a legal agreement with the creditors to whom they owe money, agreeing and defining exactly how that company's liabilities and moneys owed will be repaid.

By completing the CVA procedure, a company in financial difficulties may be able to cut an agreement with their existing creditors as to when and how the money they owe shall be repaid. This may involve complete or part repayment of the debts owed – dependant upon the financial circumstances in which the company finds itself and what it can physically afford.

Although obviously not ideal for them, some creditors may choose to support the actioning of a CVA if the alternative situation for their debtor is to face immediate and total liquidation - which would in turn most likely provide next to nothing if indeed nothing at all to the creditors in question. CVA’s essentially aim to act and protect the best interests of the crediting parties – but simultaneously allow a company that owes large volumes of money which it cannot immediately pay back to remain trading and therefore keep its staff in work. When a CVA is agreed however, the proposed repayments must be realistic and achievable, so as to give the creditors a fair chance of recouping some or all of the monies they are owed.

A company is only allowed to suggest the implementation of a company voluntary arrangement if it is in a trading situation in which it is insolvent or contingently insolvent. Three quarters of the creditors are required to agree to the proposal in order for it to be pushed through for approval. Once agreed, the CVA will bind all creditor parties regardless as to whether they voted for or against the measures, and will also allow the current directors remain in charge of their company.

What is an IVA?

When faced with spiralling debts looking for a solution is often confusing to say the very least, so ensuring you understand key debt management options and all the associated jargon is essential. In this article we will examine the key question of what is an IVA?
     An IVA stands for Individual Voluntary Arrangement and is an approach that can be taken by individuals to try and manage their debt problems. It is some times taken on by those people who are in extreme debt but who want to avoid the issues associated with bankruptcy - and an IVA may allow them a stay of execution at least. By agreeing a legally binding deal (that is overseen by an insolvency practioner) with those to whom you owe money it may be possible to avoid the immediate impact of bankruptcy.
     However, an IVA is not available to everyone so it is important to know if you qualify for this financial option.

What is a DMP? Debt Management Plans Explained

You may have heard the abbreviation DMP banded around in the papers or on the TV - well you should learn that this stands for "Debt Management Plan". Essentially speaking, a DMP is a way of trying to manage and reduce the monthly payments you are obliged to make on your existing debts by making a mutual agreement with your creditors. 
     This can be advantageous in some circumstances as it may in turn potentially allow you to gradually settle your debt over a more extensive and protracted period of time - which may allow you to relieve the immediate pressures of debt hanging over your head.
     However - there are also potential negative factors to considerer when thinking of adopting a DMP. For example in most instances there is a strong chance ongoing interest will still be accumulated against your outstanding balance.

Credit Card Debt Can Cause Problems When Medical Bills Arise

Store or credit card debt has long been substantially recognised as the reason above any other possible reasons why individuals are afflicted by miserable credit ratings across the nation. The most probable grounds why large numbers of citizens endure from this vicious circle of debt is that it is hard to maintain a track of all alleys of spending through your cards and bills. This is even more true because when somebody is hit with some kind of a health related or even just non medical urgent bills it is hard to know where to turn. In such states of affairs, it is inconceivable to think of the consequences of spending more and getting into more debt - but given that it is such a critical situation you may have no option.