IVA Pros and Cons

By obtaining an Individual Voluntary Arrangement (IVA) you are taking a positive step in clearing your debt, and unlike a Bankruptcy and IVA will show your Creditors that you wish to make an effort to pay off at least a portion of your debt.
Although with an IVA you do not pay off the entire debt sum it is typically better for both the individual and the Creditor. It is important to remember that the creditor’s main goal is to make as much of their money back as possible. As with any decision there are both positive and negative aspects.
Below we will provide you with an overview of both.

IVA Pros

  • Unlike a Bankruptcy an IVA is a discreet solution, your name won’t be published in any newspaper, your anonymity is protected.
  • At the end of your IVA your debt is completely cleared.
  • You will not lose your home when you have an IVA.
  • Your bank account will not allow for overdraft but will remain unaffected by an IVA.
  • Almost 60% of your debt will be written off.
  • You will only make the payments that you can afford.
  • You are legally protected from Creditors repeatedly or continuously contact you with intent to annoy or abuse.
  • No court action can be taken against you during the IVA period.
  • You will be repairing your Credit Score.
  • Trade as a business is still allowed.
  • You have a voice in the process of fixing your debt.
  • You can maintain a job within government.
  • Your job as the head of your company will not be in jeopardy. 
  • You may still run for and hold a public office.
  • IVAs are typically cheaper solutions to Bankruptcies (make sure you understand all the costs involved when applying).
  • You will not lose your assets (if you stick on your IVA agreement).
  • Creditors usually prefer and IVA to a Bankruptcy because they get tax breaks.
  • An IVA is legally binding and cannot change after implemented.
  • Even those creditors who do not agree in your meeting are legally bound to the IVA.
  • An IVA does not restrict you the way a Bankruptcy will.

IVA cons and caveats

  • An Individual Voluntary Arrangement is a longer process than a Bankruptcy. The typical IVA will last approximately five years, whereas Bankruptcy will only take a year.
  • An IVA is public record; upon agreement of the IVA your Insolvency Practitioner will register your application into the Individual Insolvency Register.
  • Your Insolvency Practitioner will keep a close watch on your finances over the course of your IVA. They will retain access to your wages, in the instance that you begin to make more money they will have you pay more to your Creditors.
  • Although the typical time span of an IVA is five years in many instances it will actually last up to six years.
  • The equity of your home may be used as a form of payment to your Creditors. Your Insolvency Practitioner may require that you give some of your home equity to your creditors as payment towards your debt.
  • Your debt has to be at least £15,000 and you must be in debt to at least three creditors in order to qualify for an IVA.
  • The minimum monthly payment allotted for an IVA is £200; you must be able to pay at least this much to qualify for an IVA.
  • An IVA is a legal contract between you and your Creditors, once agreed upon there is no turning back; you are locked into the agreement for the entire five years.
  • You cannot apply for new credit while in an IVA.
  • An IVA will remain on your credit report six years after it has been settled.
  • You must gain a 75% positive vote with your creditors to have an IVA approved.
  • Obtaining the services of an Insolvency Practitioner has monthly expenses, because an IVA must be set up and monitored by an Insolvency Practitioner constantly.
  • It is a criminal offense to fabricate any information on an IVA in attempt to rid yourself of your debts.

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