If you’re struggling with debt, it’s important to act now. If you don’t, your debt problem could get worse.
One way to deal with your debt is to enter into an Individual Voluntary Arrangement (IVA). This is a legally binding agreement between you and your creditors to repay your debts over a set period of time. IVAs are a popular debt solution, but they’re not right for everyone. Before you decide to enter into an IVA, it’s important to understand how they work and to make sure that an IVA is the right debt solution for you.
If you’re considering an IVA, we’ve put together some information to help you make a decision.
What Is An IVA?
An IVA is a legally binding agreement between you and your creditors to repay your debts over a set period of time. IVAs are a popular debt solution, but they’re not right for everyone. Before you decide to enter into an IVA, it’s important to understand how they work and to make sure that an IVA is the right debt solution for you.
How Does An IVA Work?
When you enter into an IVA, you agree to repay your creditors a certain amount of money each month for a set period of time. This money is used to pay off your debts, as well as the fees of the IVA company and your creditors.
At the end of the IVA, any remaining debt is written off. This means that you don’t have to pay back anything else.
Is An IVA Right For Me?
An IVA might be right for you if you’re struggling to repay your debts and you owe money to more than one creditor. You should also consider an IVA if you are unable to get a debt consolidation loan and you’re facing bankruptcy.
Key Advantages Of Ivas
1. Your debt will be written off after five years
An IVA is a formal agreement between you and your creditors to repay your debts over a period of 5 years. After you have made the agreed repayments for this period, any remaining debt will be written off. This can provide a fresh start for struggling individuals and allow them to get their finances back on track.
2. An IVA can help you keep your home
If you’re struggling to make your mortgage repayments, an IVA can help you keep your home. This is because IVAs give you more time to repay your debts, which means that you’re less likely to default on your mortgage.
3. You’ll only make one monthly payment
With an IVA, you’ll only have to make one monthly payment. This payment will go towards repaying your debts, as well as the fees of the IVA company and your creditors. This can make budgeting easier and help you get out of debt more quickly.
4. IVAs are confidential
IVAs are confidential and your creditors cannot contact you directly. This can provide some peace of mind for individuals who are struggling with debt. Your employer will also not be informed about your IVA.
Key Disadvantages Of Ivas
1. IVAs can be expensive
IVAs can be expensive, as you’ll have to pay the IVA company’s fees as well as your creditors’ fees. This can make it difficult to repay your debts and may leave you with less money each month.
2. IVAs can affect your credit rating
Your IVA will be recorded on your credit file and this could affect your ability to get credit in the future. This is because IVAs are a type of insolvency and creditors may view you as a high-risk borrower.
3. IVAs can be inflexible
Once you enter into an IVA, you’ll have to stick to the repayment plan. This can be difficult if your financial circumstances change and you’re unable to make the agreed repayments.
4. IVAs are not right for everyone
IVAs are not right for everyone and you should consider all of your options before deciding to enter into one. IVAs are a serious debt solution and should only be considered if you’re struggling to repay your debts.
If you’re considering an IVA, we suggest that you speak to a qualified debt advisor who can help you decide if an IVA is the right debt solution for you.