If you are struggling with debt, you may want to look at an Individual Voluntary Arrangement (IVA). This type of debt relief allows you to repay your debts at a reasonable rate. You will have to make payments to your creditors, which are calculated based on your income and outgoings. However, an IVA can help you get out of debt and start rebuilding your credit rating.
An IVA is a legal agreement between you and your creditors. Once you have agreed to the terms of your IVA, your creditors cannot take legal action against you or contact you directly. The IVA will protect your property and other assets from any possible legal action. In addition, your creditors will not be able to add additional charges and interest. Aside from the freezing of interest rates, an IVA also allows you to keep some of your valuable possessions, such as your home.
Another benefit of an IVA is that you are able to write off a percentage of your total debt. The percentage will vary depending on the type of debt you have and how much you have owed. For example, if you have a mortgage, you could write off 60-70% of your debt. However, this could still leave you with other debts to pay.
The best thing about an IVA is that it will help you clear your debt. Your creditors will no longer be able to add interest or pressure you to make payments above what you can afford. They will be more lenient on your repayments because they will no longer be able to seize your property.
Another major advantage of an IVA is that it can be extended for up to six years. Normally, an IVA lasts for five years, but it can be a little longer if you have missed payments. After five or six years, your outstanding debt will be written off.
However, there are also downsides to using an IVA. The main one is that your credit score will be affected. It is a good idea to seek free advice before making any decisions. There are free online debt advice tools such as Debt Remedy. These are designed to help you find the right debt solution for you, so you do not end up hurting your credit rating in the process.
Another issue with an IVA is that you will have to remortgage your home. This is particularly true if you have equity in your property. To release your equity, you might be asked to remortgage at a higher interest rate. Alternatively, you might be asked to sell your home. While this might not be desirable, it is necessary if you have a lot of unsecured debt.
Although an IVA can be a beneficial debt solution for many borrowers, it is important to weigh the pros and cons before making a decision. This will help you to decide if you should use an IVA and how to proceed.
Pros and Cons of an Individual Voluntary Arrangement was first seen on Debt Worries