Choosing an IVA (Individual Voluntary Arrangement) has many advantages, the main one being that you will be heading toward a future without debt. You'll need to know all the implications of an IVA before you begin.
IVA Pros
Creditor Contact
During an IVA your creditors are legally unable to contact you for payment and your Insolvency Practitioner will communicate with your creditors for you.
Legally Binding Agreement
Because an IVA is legally binding, you have the security of knowing your creditors can’t change the terms and you know where you stand.
Stop Interest
When you can’t pay off a debt, the interest rates, fees and charges keep mounting. Your interest and charges will be frozen too.
Easier Payments
You only make one lower monthly repayment, which then gets distributed to the creditors for you.
Credit Rating
After you complete an IVA it remains on your credit rating for 12 months, after that it disappears.
Career Options
An IVA has no career restrictions, however in some proffesions and positions you are unable to work if you are bankrupt.
Privacy
The only people that need know are your creditors, the Insolvency Service, and any people you choose to tell.
Asset Control
You will be able to keep your assets with an IVA, unlike bankruptcy in which you could also risk losing your home. Depending on your assets, you may be required to release some equity, or trade your car in for a more modest version, but your house won't be taken from you.
Time
With an IVA you can be debt free in five years. If you complete it successfully you may have a portion of your debt written off.
IVA Cons
Equity
You don’t lose your assets, but you may have to release some of the equity in your home as a final payment to your creditors.
Consequences of Failure
If you fail your IVA by stopping payments it's possible you could be made bankrupt. However what usually happens is your situation returns to how it was before your IVA started.
No Borrowing
You are unable to use credit or store cards and your bank account will not be able to have overdraft facilities until after your completion.
We can help you take the next step in getting out debt by recommending reputable debt organisations. Click to find out how to arrange an IVA and also get some confidential advice to help you get out of debt.
