Using an Individual Voluntary Arrangement (IVA) to pay off debt is a good idea for many people. However, IVAs come with their own set of pros and cons. Before committing to an IVA, you should consider these aspects.
An IVA is a legal agreement that allows you to pay back a percentage of your debt over a set period. This allows you to keep creditors in check while you rebuild your credit rating. It can also shield you from bankruptcy. In an IVA, you pay back an agreed percentage of your debt in monthly installments, and then the remainder of your debt is written off after about five or six years. The amount that you pay back will vary depending on your personal circumstances, but you’re likely to end up paying off around 60% to 70% of your total debt.
An IVA can also protect you from legal action, but only if you have a good credit rating. If you fail to make a payment, your credit rating may suffer. This is because credit card companies may add interest to your balance, which can make it difficult to keep up with payments. If you don’t pay your credit cards on time, your credit rating could suffer even more. If your credit score is poor, you could even find it harder to rent an apartment or buy a car.
One of the most important advantages of an IVA is that you will no longer have to worry about creditors calling you. They will not be able to contact you directly, and they will not be able to pursue legal action against you. This is because the IVA is a legal agreement between you and your creditors.
When you enter an IVA, the rate of interest on your debt will be frozen, and you will no longer be able to take out a loan to pay back your debt. This is because an IVA is a legal agreement that is binding on all your creditors. The IVA also protects you from legal action, so you don’t have to worry about being arrested or jailed.
Despite its advantages, an IVA can be a little bit of a pain. You’ll have to pay an Insolvency Practitioner (IP) to help you navigate the process. You also have to stick to a budget for at least five years. You will be required to review your income and expenditure every 12 months to see if you’re staying within your means. You will also need to attempt to re-mortgage your home at least six months before the end of your IVA. If you have equity in your home, this might give you a few extra months to get the house in order.
The most important advantage of an IVA is that it can help you avoid bankruptcy. It can also help you to organize your debt. This means that you’ll have a fresh start with your creditors. If you’re unable to make payments, the IVA can help you to avoid court, and you’ll also be able to pay off your debt without having to worry about foreclosure.