Friday 6 January 2023

The Benefits And Drawbacks Of An Individual Voluntary Arrangement (IVA)

Getting into an IVA -- an Individual Voluntary Arrangement -- is a financial move that comes with both benefits and drawbacks. For some people struggling to deal with debt, an IVA can be a nearly-ideal solution. There are other individuals for whom an IVA is not the best choice take a look here to find out more. To help you understand how IVAs work and decide whether an IVA would be a good fit for your needs, we've put together this list of the most important advantages and disadvantages they offer.

IVAs: The Positive Points

* An IVA allows you to settle your debts by repaying only a percentage of the total amount you owe. Most creditors like Individual Voluntary Arrangements because you will be paying back a larger portion than you would if you declared bankruptcy.

* An IVA gives you a firm schedule for clearing all your debts. Once the Arrangement is complete, you can start a "new" financial life free of the debts that were weighing you down.

* The harrowing calls from creditors will stop. IVAs are comprehensive and legally binding; your creditors are no longer allowed to pursue legal action or to try to demand repayment from you. Note that your creditors do have to agree to the terms of your IVA for it to take effect. You need to get affirmative votes from creditors that account for at least 75 percent of your debt.

* An IVA will let you keep your home. Just bear in mind that your IVA may oblige you to free up equity for unsecured creditors by remortgaging your home or refinancing your existing mortgage. Our advisers would be happy to provide you with additional details on this point.

* IVAs are affordable. Because an Arrangement is tailored to your situation, your monthly payments will take your current income and expenses into account. By design, IVA payments fit your budget.

* IVAs stop interest, charges, and penalty fees from building up on your unsecured debts. This makes it easier for you to concentrate on repayment.

* With an IVA, you always have financial guidance readily available. We will support you through all stages of the IVA process, and we will always be available to answer your questions and address our concerns.

IVAs: The Potential Drawbacks

* While most of the IVAs we propose get accepted, putting one in force does require your creditors' approval. This means we cannot guarantee that we can get you into an IVA.

* You are legally bound to abide by the terms of the IVA. While the monthly payments are designed to be realistic, you shouldn't expect to accumulate much surplus cash until the Arrangement is complete.

* An IVA will affect your credit score. IVAs stay on your record for six years. This is measured from the date it takes effect. If your Arrangement is shorter than this period, your credit will still be negatively affected until the six years are up.

* All IVAs are recorded on the register of the Individual Insolvency Service.

* You will be paying additional fees to your IVA provider. These are often incorporated into your main IVA payments, though.

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