Are you struggling to manage your debts? If so, an Individual Voluntary Arrangement (IVA) may be your solution. An IVA allows people with serious financial difficulties to clear their debts within five or six years. It is becoming increasingly popular as a debt solution due to its flexibility and ability to help individuals recover financially. However, before signing up for an IVA, it is important to consider the pros and cons of this arrangement. In this article, we will explore some of the advantages and disadvantages of entering into an IVA so that readers can decide whether this is the right debt solution for them.
What's Included?
IVA Pros (IVA Advantages)
Get Your Debt Written Off
A major benefit of entering an IVA is that it can help you get your debt written off. This means that any remaining debt can be wiped off when your IVA plan ends after five or six years. This is a great way to help you become financially free and gives you a fresh start. It can also make it easier to secure credit in the future.
Your Creditors Won’t Contact You
An appealing aspect of an IVA is that it stops creditor contact. This means that once you have set up your IVA, your creditors won’t be able to call or write to you asking for payment. Your IVA supervisor will be responsible for communicating with your creditors on your behalf and working out a payment plan.
Only Make One Low Payment
When you enter an IVA, you only have to make one low monthly payment. This payment is tailored to your individual circumstances and is based on your income, assets and liabilities. The monthly payments are designed to be affordable, so you don’t struggle to keep up with them. This makes managing your debts and staying on top of payments much easier.
Protect Your Home
One of the biggest advantages of entering an IVA is that it can help to protect your home. If you are struggling with debt and have a secured loan or mortgage, your home could be at risk if you don’t take action. An IVA means that you can get a payment plan in place that is tailored to your budget and won’t put your home in danger.
Keep Your Car
When you enter into an IVA, you can also keep your car. In some cases, creditors can repossess a vehicle if the debtors cannot meet repayments. However, an IVA prevents this from happening as your monthly payments will be tailored to your budget and won’t put your car in danger. The amount you pay each month towards the car will depend on the vehicle’s value and any remaining debt that needs to be cleared. This makes it easier for people with vehicles to clear their debts without worrying about losing them.
No Stigma
Another important factor is that there is no stigma attached to an IVA. This means you don’t have to worry about people judging you for your financial situation, as this debt solution is becoming increasingly common. Unlike bankruptcy, which carries a huge stigma and can negatively impact your reputation, an IVA is viewed more favourably and can help you to get back on track financially.
Keep Your Pension
A further benefit of an IVA is that it can help to protect your pension. If you are struggling with debt, creditors may be able to take money from your pension to pay off the debt. An IVA means that this won’t happen as your creditors have agreed not to touch your pension when agreeing.
Stop Further Interest
An IVA can help to stop further interest from accruing on your debts. When you sign up for an IVA, all interest and charges will be frozen, and no further charges will be added to your debt. This means that you won’t have to worry about your debt increasing over time, making it easier to focus on paying off what you owe. It also makes the repayment process more manageable and less stressful for you.
No More Charges
When you enter an IVA, no more charges will be added to your debts. This means that the total amount of money you owe is fixed, and you won’t have to worry about additional costs or fees. This makes it much easier to focus on paying off what you owe without worrying about additional charges.
You Can Take Payment Holidays
When you enter into an IVA, you have the ability to take payment holidays. If your financial situation changes or you struggle to keep up with your monthly payments, you can take a break from making payments for a certain period. During this time, no interest or charges will be added to your debt, and you won’t have to worry about increasing debt. This gives you peace of mind and makes it easier for you to manage your finances.
Easy To Get Started
Getting started with an IVA is relatively straightforward. All you need to do is contact a Professional Insolvency Practitioner (PIP) who will assess your financial situation and help to set up the arrangement. They can also advise you on the best course of action for dealing with your debt and suggest any changes you may need to make to ensure you keep up with the payments. This means starting is easy, and you don’t need to worry about dealing with creditors or collection agencies.
How can Credibble help me?
Dealing with debt can be overwhelming, especially when debt collectors or bailiffs are involved. Don’t panic! The Credibble Team is here to help. We can help you to stop proceedings and reduce the cost of your debt for free.
We offer a unique debt solution service partnered with Equifax, a world leader providing consumer credit report data. This means we have instant access to all your major debt without you having to search through your paperwork. Furthermore, we’re supported by the Natwest Accelerator Programme for business and have a multiyear relationship with the organisation. Our extensive and unique personal finance knowledge goes far beyond debt solutions – so you can trust that you are in safe hands.
No Setup Costs
When entering into an IVA, one of the main advantages is that there are no setup costs. This means you won’t need to pay any upfront fees or charges when starting an IVA. As well as this, it also means that you don’t need to worry about any hidden costs or additional fees. This makes it easier to budget and plan for repayment, as you know exactly how much you must pay each month.
No Career Impact
One of the biggest concerns regarding debt solutions is their potential impact on one’s career. With an IVA, there is no need to worry about this, as it will not affect your career in any way. Many employers understand those taking steps to manage their debt and may offer financial advice or support. This means you can focus on your career without worrying about the IVA.
Generous Allowances
An IVA also allows for generous allowances that can be used to cover general living expenses. These allowances are agreed upon with your creditors and consider your circumstances and the amount of debt you owe. This means that you won’t need to worry about meeting your monthly expenses, as part of your repayment plan will be used to cover these costs.
Provides a Fresh Start
When you enter an IVA, it allows you to clear your debts within five or six years and gives you a fresh start. It can help relieve the stress of debt worries, as you will have a manageable repayment plan considering your circumstances and current financial situation. You won’t have to worry about unmanageable debts or aggressive creditors, which can be a huge relief.
However, it is important to remember that an IVA isn’t for everyone, and you should consider the pros and cons before entering into one. To make sure that you are making the right decision for your circumstances, it is best to speak with a qualified financial advisor or an independent debt charity before making a final decision. Credibble experts are on hand to provide you with all your support.
IVA Cons (IVA Disadvantages)
Impacts on Your Credit Rating
A potential disadvantage of an IVA is that it can impact your credit rating. This is because an IVA will appear on your credit report and stay there for six years, which could make it more difficult to obtain credit in the future. It is important to be aware of this before signing up for an IVA and to consider how it may affect your future financial plans.
Need to Meet Eligibility Criteria
When entering into an IVA, it is important to remember that you will need to meet certain eligibility criteria. Generally, to be eligible for an IVA, you must have at least £5,000 of unsecured debt and no more than £20,000 of disposable income each month. If your circumstances don’t meet these criteria, an IVA may not be the right solution.
Asked to Make A Monthly Payment
You will be asked to make a regular monthly payment when entering an IVA. This payment will be based on your circumstances and the debt you owe. You must meet the repayment plan in full each month and ensure it is within your budget. Your repayment plan may also include additional fees, so it is important to consider this when budgeting for an IVA.
May Have to Release Equity in Your Property
When entering an IVA, you may be asked to release equity from your property as part of the arrangement. If you own a property, such as a house or flat, you must release some of its equity to pay your debt. This decision can be difficult and should not be made without carefully considering your options.
In conclusion, an IVA can be a useful debt solution for those with serious financial difficulties who meet the eligibility criteria and can afford regular monthly payments. It enables those in debt to clear their debts within five or six years and gives them a fresh start. However,
Summary
An IVA (Individual Voluntary Arrangement) is a debt solution that enables people with serious financial difficulties to clear their debts within five or six years. It can provide much-needed relief from unmanageable debt. However, it is important to consider all the pros and cons before entering an IVA. Doing so will help you decide whether this is the right debt solution for your circumstances. Credibble can provide expert advice and assistance in setting up an IVA, helping to ensure that it is a successful process. With the right support and guidance, an IVA may be the ideal way to escape a difficult financial situation.
