Like everything in life, there are good and bad things about an IVA, and they are not suitable for everyone with money problems. If you are wondering if you should consider one, you need to look at the advantages and disadvantages of an IVA.
You need to have £6000 or more worth of debt, and at least two creditors to qualify for this type of debt management. You need to live in England, Northern Ireland or Wales and have a steady income to be able to meet the agreed monthly payments.
The Advantages of an IVA
There are several advantages to an IVA, but you should make sure you get the right IVA Advice before contemplating moving forward with one. Just some of the benefits are:
- It will have less of an impact on your life than bankruptcy. You cannot be forced to sell your home with an IVA, for instance, but you may be asked to release any equity there is to help reduce the debts. With bankruptcy, you are barred from certain jobs for its duration, such as being a company director. An IVA does not affect your job prospects unless it is a condition of the employment that you do not have one.
- Your monthly payments will be agreed at an affordable level, which is usually much lower than you are currently trying to pay.
- All interest and charges are frozen as soon as the IVA is agreed to prevent any of the debts increasing.
- Your creditors cannot take any other legal action against you, such as filing for your bankruptcy or sending bailiffs to take goods.
- Any debt still outstanding after the five years is written off. This is often 50% of the total amount owed but can be as high as 70%.
- The relief of knowing your finances will be sorted can far outweigh all the other advantages.
The Disadvantages of an IVA
The disadvantages of an IVA include:
- Being disciplined enough to ensure that the payments are paid as and when they are due every month without fail. This can mean living within a strict budget to ensure your payments are met.
- Your IVA will be on the Insolvency Register until three months after it has been successfully concluded. It will be on your credit record for 6 years. Until it has been cleared from both, you may have trouble arranging loans or finance.
- If your IVA should fail, any fees that have been paid within your monthly payment will be lost. It also then leaves you open to bankruptcy proceedings.
Gat the Right Advice Before Starting an IVA
You should always get advice from the professionals before entering into any legal agreement. Rules and regulations change all the time, and what was right for a friend 5 years ago could be in breach of the law now. An IVA can be a way for you to get a new financial start, but only if it is done properly and you see it through to the end.