Is an IVA Right For You?
There are many benefits of an IVA, and this article aims to explain how you can get your finances back on track with one. IVAs stop your creditors from taking any further action against you, and you can set them up as easily as you like. But what are the drawbacks? And will an IVA affect your credit score and your ability to get a mortgage? Fortunately, these concerns are not common.
IVAs can help you get finances back on track
If you owe more than you can afford to repay, you may be better off with an IVA. IVAs are designed to allow you to make affordable monthly repayments. They normally last for 60 months, at the end of which all remaining debts are written off. You can amend your IVA terms to fit your circumstances, but changes must be agreed between you and your creditors. Alternatively, you can contact the government for advice.
You must be aware that IVAs will negatively affect your credit rating. However, if you manage it properly, they can help you to get your finances back on track. CCJs remain on your credit report for six years. An IVA can negatively affect your credit score, because it shows that you had trouble paying your debts in the past. As such, future lenders may not be keen to give you credit, or they will charge you a higher interest rate.
They prevent creditors from taking any action against you
IVAs can be a great option for people who want to avoid bankruptcy. They freeze interest on outstanding debt and prevent creditors from taking further action against you. They also let people keep their homes. In some cases, IVAs can even prevent creditors from taking action against you if you’re on an income tax debt repayment plan. However, there are several important things to consider before deciding on a repayment plan.
Unlike bankruptcy, an IVA has no limit on the amount you can pay back. Your IP will agree to take less than the full amount owed in exchange for not taking any further action against you. IVA fees are high; you will need to pay an IP fee to set up the agreement and a handling fee for each payment. These fees will be paid to your IP, so it is worth it to make sure your IVA agreement is realistic and works for your situation.
They affect your credit score
When you decide to apply for an IVA, you should remember that your credit score will be affected by it. In the past, people with IVAs often had a much worse credit rating than those without. However, if you’re serious about regaining your credit, you should keep reading to find out how an IVA can help you improve your credit rating. In addition to checking your credit report, you should also contact a mortgage broker who will help you find the best lender to work with.
There are two main reasons why IVAs affect your credit rating. The first is that they reduce the amount of credit you can obtain. Your credit rating is a three-digit number that lenders use to assess whether you are likely to repay loans. Your credit file is a record of all of your financial dealings over the past six years, so any time you take out credit, it will be recorded. Consequently, IVAs can have a big impact on your credit score.
They affect your ability to get a mortgage
If you have an IVA, you may be wondering how it affects your ability to get a mortgage. Firstly, lenders will likely ask you about any credit problems you may have had in the past. It’s important to keep in mind that a bad credit history is a red flag for many mortgage lenders, so you may need to be more diligent in repairing your credit. You may have to put down a higher deposit than a good credit history, and a higher rate of interest will be required.
An IVA will stay on your credit file for a certain amount of time, usually six years. While most other debt solutions only stay on your credit file for a limited amount of time, an IVA can impact your ability to get further credit for up to six years. Despite this, your credit rating will remain intact as long as you follow the conditions of the agreement. So, before you apply for a mortgage, make sure to send a copy of your IP letter to the credit reference agencies.
Is an IVA Right For You? was first seen on Help with My Debt