IVA Pros and Cons For Business Owners
As with any other debt relief option, there are IVA Pros and Cons to consider before deciding to file for an IVA. One of the biggest advantages of an IVA is that it prevents your creditors from pursuing legal action against you and freezing your assets. This is good news for a business owner, since it can free up cash flow and keep your employees employed. The downside is that an IVA will only cover unsecured debts and not secured debts. This means that you can’t use your IVA to get a loan or apply for another credit card.
Another Pro of an IVA is that your payments will be much more affordable during the plan. In general, you’ll pay between 20% and 50% of your debts with an IVA. While this may not seem like much, it can be helpful in securing your creditors’ approval. Plus, the money you pay each month will go towards supervision and management costs.
Another pro of an IVA is that you’ll only have to pay back the debt you can afford. At the end of the scheme, the rest of the debt will be written off – up to 70%. In addition, your IVA repayments are based on your monthly income and your living expenses. This means that they won’t negatively impact your food or heating bills.
Depending on your circumstances, an IVA can be very flexible. For example, if you only have a little extra income, you can pay your creditors in a lump sum. You’ll need to discuss the payment structure with your insolvency practitioner to make sure it is feasible. You should always be realistic and work out a budget before filing for an IVA.
Another pro of an IVA is that it is a legally binding agreement. The majority of creditors will have to approve the plan, but even if they reject it, you’ll have to adhere to the terms of your IVA. Many unsecured debts are difficult to track, and missing even one payment can ruin your credit rating and your financial situation. But an IVA will simplify the repayment process and ensure you’ll have the money you need for essentials.
An IVA isn’t a universal debt-clearing solution. It’s a structured plan designed to clear unsecured debt, such as credit cards, personal loans, and utility arrears. You can’t apply for an IVA if you owe debt that is secured by an asset, such as a mortgage or car loan.
You may have to pay a fee to an IVA firm to conduct your case. These fees are deducted from your payments into the IVA. This is the only downside to an IVA. Some firms even charge an upfront fee to prepare an IVA proposal. As a result, it’s important to seek free and independent advice before you file for one. A failed IVA can result in bankruptcy proceedings, which is a serious financial burden.
IVA Pros and Cons For Business Owners was first seen on Help with My Debt