The Individual Voluntary Arrangement (IVA) is a legally binding agreement designed to help people get their financial lives back on track. It allows debtors to pay their creditors at a rate they can afford. This helps to keep debt under control, ensuring that people do not miss payments which can lead to major financial problems in the future. However, there are both advantages and disadvantages to using an IVA. Knowing the pros and cons will make it easier to decide whether you are eligible for one.
An IVA will allow you to pay your creditors back at a more reasonable rate, which will reduce the stress of owing money. In addition, an IVA will also protect you from creditors, who often try to take legal action against you for missing payments.
Another advantage of an IVA is the fact that you will not be forced to sell your home during the process. You may be required to re-mortgage your property, which will give you access to the equity that you need to clear your unsecured creditors. This could be at a higher interest rate, but you will not have to worry about foreclosure or repossession.
An IVA also helps to rebuild your credit rating. Although you might not be able to borrow as much in the future as you did before entering an IVA, the repayments will demonstrate that you are making the best effort to repay your debts.
An IVA can also help to protect you from bankruptcy, which can negatively affect your credit score. For many, the main advantage of an IVA is the protection it provides. When you are in an IVA, your creditors are not allowed to contact you directly, and they cannot take any legal action against you.
A major benefit of an IVA is that you will be able to pay off your unsecured debts over a period of five to six years. If you have a substantial amount of debt, an IVA may be the best option for you. At the end of the IVA, you will be able to write off most of your remaining debts.
While an IVA is a great way to reduce your debts, it is important to keep in mind that there are other options that are equally or more effective. Some of these include reducing your monthly payments, seeking professional advice, and signing up to a reputable debt management service.
If you are considering an IVA, you should seek free advice from an independent charity, such as StepChange, or a reputable online resource, such as Debt Remedy. These organizations will provide you with impartial, unbiased guidance on a variety of options. They will also provide you with the information you need to determine which one is right for you.
An IVA will allow you to keep your job and business, without having to give up your home or assets. This can be especially useful if you are being harassed by your creditors, but remember that it will also require you to commit to a long term program.
IVA Pros and Cons – Should You Enter Into One? was first seen on Help with My Debt