Essentially, an IVA is a legally binding contract that reduces the amount of monthly payments you have to make on your debts. This allows you to repay your debts at a more affordable rate, and also helps protect your other assets. However, there are a few things you should know about IVAs before you sign up.
First, it is important to know what your debts are. You will need to know how much you owe, and how much you earn. This will give you a rough idea of how much you can afford to repay. You should also be aware that some IVAs require you to pay an up-front fee before they put forward a proposal for you. Normally, this fee will only be refunded if the proposal is approved by your creditors. It is also worth noting that IVAs have a range of other fees, and a fee may not be included in your monthly repayment amount.
It’s also worth noting that an IVA isn’t suitable for everyone. There are certain debt types that are not covered, including secured loans. Also, you may be unable to borrow if you have bad credit. In this case, you may have to take out a new loan or seek help from a debt management company.
Luckily, you can get free debt advice from a registered charity, such as the Debt Advice Foundation. They provide a range of information about IVAs, and can also provide you with some helpful money tips.
It is also worth noting that an IVA can take up to 6 years to complete. This can make borrowing difficult for a long period of time. You may also be asked to re-mortgage your house in the second year of an IVA. If you can’t afford to make the required payments, you may lose your home. However, in many cases, you will be able to keep your home. However, you will need to inform your IP of any changes in your circumstances.
An IVA may be a good idea, but you may also want to consider alternative debt repayment options. You could, for example, try to avoid bankruptcy by taking out a secured loan. The other option is to sell your assets and repay the debts. If you can’t afford the debts, then an IVA may be the only way to go.
It is also important to understand the risks associated with an IVA. You may have trouble getting a loan if your credit rating is low, and you may lose your home if you can’t afford the repayments. You may also be asked to make higher payments than you can afford.
As well as the IVA, you may have to pay an up-front fee for the services of an insolvency practitioner. You may also have to make monthly payments for a year or more. Getting an IVA is a big decision and can affect your credit rating for years to come. It’s a good idea to shop around and compare services to find the right deal for you.
What is an IVA? was first seen on Help with My Debt