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An IVA (Individual Voluntary Arrangement) is the route some people take after struggling to make repayments on a substantial amount of debt and requiring outside help.
It can be a huge benefit to those who are struggling to see the light at the end of the tunnel.
The process involves an insolvency practitioner, working with you and calculating how much you can afford to repay each month before putting together a proposal.
This proposal is then sent to your creditors, with a suggested monthly repayment amount and the request to stop any legal action they were taking against your debts. Once you have come to an agreement with an IVA provider you will then have to make your monthly repayments on time and attend IVA annual reviews to confirm that you can still afford the agreed payments. Advisors will be available throughout your plan should you have any questions or concerns.
It will take around six years for an IVA to completely disappear from your credit score, so it’s what you do in the mean time that will affect your future. Even if you pay your IVA back early, it doesn’t give you an advantage in terms of your credit score, and it’s still going to take around six years to ‘disappear’.
The first thing you need to do upon completing your IVA is request an IVA Completion Certificate, this shows that you have completed paying off all of your debt. From this moment on, it’s up to you to get your credit score back up to scratch, here are a few tips to get your started.
See Where You Stand
You can check your credit yourself using any of the credit referencing reference agencies including: Call Credit, Equifax and Experian. Once you’re up-to-date with your current credit report you can see where you stand and what sort of situation you’re in.
Pay as You Go, Where You Can
For now, you need to keep out of as much debt as you can and things like direct debits for energy bills, mobile phone contracts and credit cards will need to be pay as you go. You can apply for credit cards that that are pre-paid or with small limits that you can pay off each month, if you feel you need one.
Stop Joint Accounts
If you’ve had joint financial products with a partner in the past, you may find that they affect your credit score if you haven’t officially asked for a ‘notice of dissociation’ to be applied to your file. To improve your credit score make sure you’re no longer linked to ex-partners and if you aren’t sure, ask your bank.
Update Your Information
It may sound unrelated but you can help towards a good credit score just by keeping the relevant people up-to-date with your details. This includes making sure that you are on the electoral roll and that your address and any other details are all correct with the credit reference agencies.
Close Old Accounts
Your credit rating considers every single account that you have open, even if you no longer ‘use’ them. So, even if you don’t owe anything, lenders will look at all of your available credit before making a decision on an application, so make sure you close accounts no longer in use and try to make your banking a simple process.
These simple steps will give your credit rating that boost it needs while giving you something positive to work towards. Remember that banks and lending companies understand how debt can affect you and your family. An IVA is a debt solution that can hopefully enable you to continue living a happy and normal life, while fixing those money issues!
Check out our complete guide to credit and credit cards here.