If you are unsure whether you are eligible for an IVA, you can speak to a free debt adviser. The type of IVA you qualify for will depend on your assets and savings. The type you choose will also depend on your age and the type of pension you have. For example, if you’re over 55, creditors may ask you to stop paying into a defined contribution pension.
If you have a bad credit history, you may struggle to find a good interest rate and good reputable lenders. Therefore, it’s important to discuss any new loan you might want with your IP. Otherwise, your finances could be put at risk – you could become bankrupt or lose your home.
An IVA is a legal agreement between you and your creditors. To make it work, you have to agree to its terms and be accepted by 75% of your creditors. These creditors are referred to as ‘voting creditors’ and hold 75% of your debt. The remaining creditors can vote against the IVA proposal if they are not satisfied with it. Creditors may also haggle with you to make payments over a longer period of time.
Another advantage of an IVA is that you do not have to give up your home. Often, your home is worth more than your total debts. An IVA allows you to keep your home while paying off your creditors. However, you may have to sell some of your assets to reduce your debt.
When applying for an IVA, you should consider your property as well as your income. The IP will look at how much equity you have and whether you can use the equity to pay off your debts in full. Your home is included in the IVA, even if you don’t use it for business. You should also consider your private pension, because an IVA stops the interest on it and freezes the charges.
One downside to an IVA is the negative impact it has on your credit rating. It will affect your ability to get credit in the future, so you’ll have to be extra careful when applying for a mortgage after you’ve finished an IVA. However, there are many lenders that specialise in debtors and can help you. In addition, you can get a ‘credit builder’ card to boost your credit rating if you need to.
IVAs usually last for five or six years. However, they can be extended for an additional 12 months if you need to. You may also be able to repay your IVA earlier by paying a lump sum. Whether you choose to do this or not will depend on your personal circumstances.
You can also opt for a self-employed IVA. These are more flexible than employee IVAs. They can accommodate seasonal income. However, they require you to provide relevant documents for annual reviews. This will affect the amount you pay in each month.
What is an IVA? was first seen on Apply for an IVA