What are the advantages of an IVA?
No social stigma attached to an IVA
An IVA is a private agreement with your creditors, which means that it is never publicised in local papers.
No professional disqualification with an IVA
An IVA does not affect your professional status or the ability to hold public office. Your employment status will not be affected, even if you are a company director, accountant, police officer, or are in the armed forces.
Debt free in 5 years or less.
An IVA lasts for a fixed period of time, normally five years. Once you have completed your IVA according to the specified terms then you are deemed to be debt free.
An IVA provides protection from creditors
Once an IVA is in place, your creditors are not allowed to take further legal action against you as long as you stick to the terms of the arrangement. They are not allowed to demand payments from you either by telephone or letter.
Interest and late payment charges frozen
Once an IVA has been agreed, your creditors are not allowed to add any interest and late payment charges.
Single affordable monthly payment
At the beginning of the IVA, a monthly repayment amount is set based on what you can afford to pay each month.
An IVA is a fixed, legally binding agreement
The IVA is a legally binding agreement between you and your creditors, which means that they may not make any changes to it once agreed.
Repaired credit rating
Once the IVA is completed successfully, your credit rating will start to improve.
Your assets are protected
Any assets, such as your home and car are usually protected under the terms of the IVA
What are the disadvantages of an IVA?
Minimum level of debt
An IVA is only suitable if the debtor has unsecured debts of at least £15,000. In addition, you will need to be able to afford a monthly payment of at least £200.
An IVA is a formal, fixed agreement.
If you do not comply with the terms of the agreement, you can still be made bankrupt.
No unsecured borrowing allowed
It is in the terms of an IVA that no further credit agreements may be entered into. Further unsecured borrowing including the use of store cards and credit cards, could result in a failure of the IVA.
Possible release of home equity
If there is equity in your house, or you have an endowment policy tied to your house, an IVA may require that you release the equity to pay your creditors.
Credit rating affected
The IVA will be noted on your credit file, and you will only be able to start improving your credit score once it is completed.
