Skip to main content

Pros and Cons of an IVA

Debt is one of the things that contribute to put people into deep financial crisis. But also, without debt, people may not have been able to survive their daily surge of expenses. If not managed properly, a debt may worsen your already worse financial state so getting a lot of debt should be avoided at all costs. Good thing is that for residents of England, Northern Ireland, and Wales, there is a thing called IVA which stands for Individual Voluntary Arrangement. This arrangement is a help to those people with debt, because it is a formal agreement between the creditors and the person so that for an agreed period of time, you will have to make monthly repayments to repay your debt.

But after the agreed period of time, all the remaining debts will be written off. Also during the whole agreement, your creditors cannot take legal actions against that will make you recover the debt. Meaning at the end of the period of this agreement, you will not be liable anymore for any debt, which means you are now debt free. This is also why people call the IVA as the debt solution.

However, although an IVA can help people who have debts, it may also have cons. This is why, before wanting to qualify for an IVA, you need to consult first a qualified expert to know whether this thing is right for you. There are also cons to this agreement such as in the case if you fail to make the monthly repayments needed in the agreement. If you fail to do so, the insolvency practitioner, who will be the one in charge of all this agreement, will have to cancel the IVA. You may also be led to bankruptcy. This is why you should really think through this process and know the details information about this. Check out the I.V.A website to know more about the IVA.

One advantage of the IVA is its duration which actually ranges for 5- 6 years. This will give you ample time to be able to do your repayments as regularly as possible. Another pro is that you are not forced to sell your own home and your other properties. You can still keep your assets such as your vehicles. However the other assets shall be discussed with regards to your proposal that shall be drafted by the insolvency practitioner (IP), and agreed upon by the creditors. Another pro is that the payments will be affordable. This is because it depends on your capacity to pay for the monthly repayments. Another good thing about the IVA is that you will have a support along the process, through the insolvency practitioner. He or she will be the one to guide you throughout the duration of the whole ordeal, and will be the one to make the proposal, to speak to your creditors, and to supervise your monthly repayments. The IP’s role is crucial because he is the one to supervise this insolvency.

For cons of the IVA, this will be strict. It means that you really have to comply with the agreement by paying what you need to pay in the monthly repayments. If you do not do so, then you will be at the risk. Another con is that not all people can qualify for this, even when in debt. Another disadvantage of an IVA is that your credit score will be affected. The IVA will stay on your credit file until six years and you may not be allowed to have a certain amount of credit as well. Another thing you should consider is the fees. Although there may be no upfront fees for most companies, there will be fees you will have to pay that will be added to your monthly repayments. This is important so that you can make sure that the monthly repayment will be affordable to you. You need to be careful and strict with the agreement so that your financial situation will not be worsened. To know more about the pros and cons of an IVA, check out so that you will know what are the other things you need to know about the arrangement, and also whether it is recommended for you or not.