This page is your full guide to the pros and cons of the IVA otherwise known as the individual voluntary arrangement.
The IVA can seem like a big decision for people seeking financial advice and therefore it is very important to be well informed about the good parts and the bad parts of the IVA (any advantages and disadvantages) before making that decision reading this page in full will help you gain a comprehensive understanding of exactly what the IVA entails, this page give you both the pros of an iva and the cons of an IVA.
IVA Pros (advantages to an IVA)
1. You will be able to write off 85% of your general unsecured debts, this means that if you have a total debt of £30,000 it is entirely possible for you to write off more than £25,000 during the course of 5 years, there is no other debt solution that would enable you to do this so this is an enormous advantage for the IVA full stop
2. Your creditors will be forced to deal with your representative during your IVA, this means they can’t contact you directly unless you break the terms of the IVA, giving you peace of mind in the knowledge that you are protected from creditor harassment for the length of the agreements after which your debts are written off anyway (The IVA Process has a facility to protect you from creditor harassment)..
3. You will become completely debt free once the IVA is finished this means that all of your previous liabilities and debts and payments due are all considered dissolved and you can start again with a debt free life which is a huge advantage for people who finally want to remove their debt millstone from around their neck.
4. On an IVA your monthly repayments are consolidated into 1 new low monthly repayment which you contribute to your representatives and which is distributed on your behalf to your creditors this means you simply make your payments into the IVA each month and allow your representative to handle this on your behalf with no further worry from yourself (The IVA is a legally binding agreement which protects you from creditor harassment, in actual fact creditors during an IVA are not allowed to contact you and must go through your insolvency practitioner to communicate in relation to your debts, you are also protected against any further legal action).
5. In an IVA you get to keep your pension which is very important for individuals who may be owners of private pensions in contrast to other Debt Solutions there is no reason for you to use your pension to repay your debts your pension will be protected under an IVA arrangement.
6. All interest and charges on your debts will be frozen within and IVA this means that during the time that you’re debts are still active during the IVA. You will get no further interest and you will also gain no further charges making it much easier over time during the course of the IVA to repay your debts and reducing the amount you pay overall.
7. A little Known facts about IVA is is that you can actually take payment holidays which means you can take breaks of up to a few months and they could be added on to the end of the IVA giving you time to enjoy more of your income and take a break from the normal routine full stop
8. With an IVA bailiffs and debt collection agencies cannot contact you by law you are protected by what is known as an interim order which is a type of legal injunction issued by the courts for people in the process of setting up an IVA. This legal protection is set up very early on in the IVA process.
9. Protect your car protect your home compared to alternative debt options now that your car know your house are at risk when paying your debts within and IVA this is part of the insolvency arrangement and part of the overall IVA agreement.
10. In an IVA you do have allowances for personal expenses for example if you wish to take a trip across the country your adviser who is working on the IVA with you (known as the insolvency practitioner) will advise you as to what is affordable and what can be done with giving your current circumstances but in general allowances are made for personal expenses so you can have some of life’s extras.
11. Your career is not affected by being on an IVA in fact it should not be mentioned at all at any stage in any interview and you are not obligated to declare it in most cases comma usually unless you are working in financial services it should not come up at all however even if it does it does not necessarily pose a risk or a barrier to you working within that industry comma in contrast to other Debt Solutions it is not advertised in the London Gazette and is therefore much less public and much more discreet, as a form of insolvency the IVA route is a much better alternative to taking out further consolidation loans or going bankrupt..
12. There are no set up fees with an IVA it cost absolutely nothing to get the process started and there are willing and capable agents ready to take your call to help you get set up as as quickly as possible. (also armed forces personnel and sole traders and business owners are more than welcome into an IVA if they meet the criteria and the majority of creditors agree to the arrangement.
IVA cons (IVA disadvantages)
Many would say in comparison to the advantages of an IVA comma the disadvantages are much less we describe them in detail below.
(The ‘Cons Of An IVA’ don’t apply to a lot of individuals in different situations, for example when it comes to situations where you may wish to ‘protect your assets’ one of the main functions of this form of insolvency (The IVA) is that your assets are protected unlike other debt solutions, however the worst case scenario in general is if you have equity in your property and still large debt levels after successful completion of the voluntary arrangement, you may in rare circumstances be asked to remortgage property to cover a portion of your debt, however if this does not apply to you then it would not come up.)
1. Your credit rating will be affected by an IVA this is due to the fact that you will be making reduced payments towards your debts but in actual fact even without the IVA this would have been the case anyway so in as much as this can be seen as a disadvantage, this would have been a disadvantage even without the IVA full stop
2. You must stay committed to the IVA if you want to reap all the benefits of the scheme, some people choose to mess manage money once enrolled on an IVA and this can cause issues down the line but provided you stay committed to the scheme you can reap all of the benefits and it should run smoothly full stop
3. Not everybody is eligible for an IVA in fact if you only have one creditor and the Debt level of £2,000 this would not be either enough in terms of the level of debt or enough in terms of the amount of creditors you must have a minimum of £5,000 worth of debt and to creditors to enter into an IVA.
4. Yes you will be asked to make a reduced monthly repayment as mentioned above however this will be heavily reduced compared to that which you were paying before some people are paying as little as £80 per month into their IVA.
5. If you have equity in your property you may need to release some of it in order to repay your debts but this is not necessarily the case and would be a point for discussion with your IVA representative.
If you would like to learn more about an IVA or even apply for an IVA you can contact us at this website using the online debt test or by requesting a free debt assessment from one of our specialists.
Entering into an IVA may be a simple process, however it’s important to consider the IVA pros and cons and to assess the impact on your financial situation before going down the IVA route, however this this said, it is easy to see why the IVA is fast becoming the most popular means of debt consolidation which has the unique ability to protect your assets, and consolidate your monthly payments to improve your financial situation and over time, your credit record (credit rating).
For people who do not qualify for an IVA debt management may be a solution for them, if you wish to get in touch with us you can do so using the form on the homepage for a free debt assessment (debt advice), to help manage any and all your unsecured debt.
For those who are unaware debt management plans are not as formal, as powerful, or as legally binding as the IVA, and they offer less protection against legal action, however they can still be a helpful solution to manage unsecured debt issues and late payment escalations, offering debt relief to people with lower amounts of debt (less than £5,000).
To apply for an IVA or for further debt advice simply use our online debt test, if you live in Scotland you can apply for the Scottish equivalent (trust deeds), for more information get in touch using our online contact form.