IVA Pros and Cons – What Are the Pros and Cons of an Individual Voluntary Arrangement?

IVA Pros and Cons

An Individual Voluntary Arrangement, or IVA, is a debt relief option. It allows a person to repay their debts in a more manageable way, while at the same time shielding them from legal action and other creditors. The arrangement will last for up to six years.

In an IVA, you make a single monthly payment that is based on your income. You pay the monthly amount to the IP (Insolvency Practitioner) and the IP will distribute it to your creditors. This ensures that the money is available each month to cover your living expenses. There is also a partial write-off of some of the debt, which will allow you to clear up some of your debts. However, this does not include any secured debts, such as your home or car.

One of the best things about an IVA is that it helps a debtor avoid bankruptcy. Unlike bankruptcy, an IVA allows a debtor to continue working, even if the company is in trouble. For example, an IVA is an ideal option for business people who owe money to several creditors.

Another benefit of an IVA is that it prevents your creditor from collecting any of the money you owe them. This means that they can’t force you to sell your home or vehicle, and they can’t contact you in an attempt to collect more. Additionally, your IVA agreement won’t affect your credit score.

Aside from the obvious benefits, one of the biggest advantages of an IVA is that it helps you ring-fence your debts. If you’re unable to pay off your credit card debt, you can opt to have it included in your IVA and pay it off as part of your repayments. At the end of your plan, your lender will pay off your remaining unsecured debt.

Depending on your credit situation, you may find that your IVA has negative effects on your credit score. If you don’t pay off your IVA, you could face the consequences of a bankruptcy. Having your name on your credit report can be disastrous, as it is a major drawback to being employed. Alternatively, you can seek independent advice from charities such as StepChange or Debt Remedy.

Another benefit of an IVA is the way that it simplifies the repayment process. It makes payments simpler and less likely to fail. It also freezes interest rates, which can be a boon to the debt settlement process.

However, the IVA isn’t for everyone. Some creditors are not willing to agree to an IVA. And if you do have the funds to repay your debts in an IVA, you should be wary of lenders who add added interest to their charges.

Also, an IVA can be tricky to negotiate with your creditors. They might be unwilling to work with you, or they might suggest changes. Ideally, you should seek advice from a licensed insolvency practitioner before committing to an IVA. That way, you can be assured that you’re receiving professional assistance.