IVA Pros and Cons
Over the past four decades, IVAs have provided a lifesaving debt relief option for many in the UK – but with any financial solution it’s essential to be aware of what you’re getting into. Educate yourself about this powerful solution and make sure that your finances will benefit from its use!
Making a financial decision can be overwhelming. When it comes to an IVA, the choice should not only reflect your current needs but also consider what impact this may have in both short- and long term situations. While there are advantages such as legal protection that come with using an IVA solution, its effects on credit score must also be taken into account when making your final decision. Weighing out options is always key – from cutting down debt costs through one monthly payment or opting for more direct negotiations – so taking time to research which would best suit you will lead towards finding the ideal resolution for tackling debts head-on!
May not be suitable in all circumstances, fees apply, your credit rating may be affected.
IVA Pros (Advantages)
- One affordable monthly payment
- Your assets are usually protected and not at risk of being sold
- Interest and charges are frozen
- Debts remaining at the end of the IVA term are written off
- A set timeframe of 60 or 72 months depending on your situation
IVA Cons (Disadvantages)
- Your credit rating will be affected for 6 years
- Should you have a windfall of £500 or more this may need to be paid into the IVA
- Your details will be listed on the insolvency register
- Can affect some types of employment
- Need 75% or more of creditors by value to vote in favour for the arrangement to be approved
Look a little closer at the IVA Pros
Affordable Monthly Payment
We understand that everyone’s financial situation is unique and strive to provide a plan specific to your circumstances. We will set up an affordable monthly payment, calculated after accounting for all of your essential expenses – leaving you with the perfect balance between repayment and peace-of-mind!
Write off Debt
Providing you have kept up to date with all of your contributions and abided by all of the IVAs terms, your creditors will agree to write off any debts left outstanding following the IVAs completion, which is typically 5 or 6 years depending of your circumstances.
No more Phone Calls
When under an IVA, the responsibility of chasing debts is taken out of your hands – a professional Insolvency Practitioner will step in and handle communications with creditors for you. No longer do you need to worry about pesky phone calls or emails nagging for payment!
Legally protected
An IVA is a legally binding agreement and so your creditors will no longer be able to pursue you for the debts included in your arrangement. However, you could still receive default notices, statements and notification if the debt is sold to another firm, but creditors must send these notices in accordance with the Consumer Credit Act.
No more Interest or Charges
With an IVA, you can put a stop to your debt snowballing, no more worries about high interest rates or additional charges! Put away the stress of mounting debts and focus on regaining financial freedom with this secure plan.
The end is in sight
An IVA offers a straightforward repayment plan for those in need of debt relief. Over the course of five to six years, you can pay back your debts knowing precisely how much will be written off at the end.
We Don’t Hide Fees
No surprises here! With an Individual Voluntary Agreement, you can plan ahead with confidence knowing that all fees are factored into your monthly payment – giving you one less thing to stress about.
Look a little closer at the IVA Cons
Your Credit Report Impact
Completing an Individual Voluntary Arrangement (IVA) is a viable solution to tackling unmanageable debt, but it’s important to be aware that the details of your agreement will remain on your credit report for its duration. This means lenders may view this when conducting credit checks and should be taken into account before making any financial decisions.
No Secured Debts
Unpaid court fines, student loans, mortgages, child maintenance arrears would require special attention when setting up an IVA. All of these obligations must be individually resolved before you can take advantage of this debt management solution.
The Insolvency Register
Your IVA will be on public display for the entire length of your plan via a database known as the Insolvency Register.
Employment Status
For those searching for a career in law or financial services, an IVA may be viewed differently by potential employers. It is important to understand the implications of having such an arrangement so that you can make informed decisions when considering job opportunities and decide if it will have any bearing on your employability prospects.
Taking further Credit
During your Individual Voluntary Arrangement, you will need to stay within a certain credit limit. Any purchase above £500 requires approval from an Insolvency Practitioner before it can be made!
Potential Windfalls
Suddenly coming into a financial windfall while on an Individual Voluntary Arrangement can often be bittersweet; while the money is certainly welcome, it may also have to go towards paying off your already-existing debts.
IVA Costs and Fees Explained
At Advice Debt, we offer complimentary consultations to help you find the best debt solution suited for your needs. An Individual Voluntary Arrangement (IVA) could be an effective route – such agreements come with built-in fees which are incorporated into monthly payments; check out our website’s dedicated section on costs and Fees to learn more!
Let's get started
Advice Debt is here to help you assess and tackle your financial challenges. Our free consultation will evaluate the details of your situation, providing an individualised payment plan tailored just for you!
Take a look at our IVA calculator – it can give insight into what kind of write offs are possible for different levels of payments. Get started today.
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Our team of experts help thousands of families every year across the UK get their finances back on track.
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*To find out more about managing your money and getting free advice, visit Money Helper, an independent service set up to help people manage their money.
