The advantages of IVAs

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The Advantages of IVAs

applying-for-an-iva Debt solutions like IVAs can seem complicated, particularly when you are first beginning to investigate possible solutions. Some of the advantages of IVAs are explained here, in simple language, to help you understand a little more of what may be involved.

IVAs are recognised in law
That means that following the formal agreement, creditors must keep to the terms of the IVA by law. This cuts out uncertainty for you and gives you a known timescale for becoming debt free.

They end the letters and calls demanding payments
It is a legally binding agreement for all creditors. They are not allowed to continue to ask you for payments on the phone, or by letter.

They stop your creditors starting court proceedings
Following agreement, your creditors will not be able to start any new legal action against you. You must keep to the IVA agreement to benefit from this protection.

You know clearly how much you have to pay each month and because the IVAs operate for an agreed ‘lifespan’ you know exactly how long you will need to pay it for.

Privacy
Details of IVAs are not published in the local newspapers. Your name could be seen in connection with your IVA on the Insolvency Register on the internet but this is not a resource most people are aware of so your situation is likely to stay completely private.

A solution without impact on your work standing
An IVA does not have implications for your professional status. As well as the general issue of some more privacy, this advantage may be particularly important to qualified professionals that don’t want the stigma sometimes associated with debt problems.

The Disadvantages of IVAs

Although it sounds too good to be true that you will be able to write off a large portion of your debt in just 5 years, there are some drawbacks to IVAs that you should consider;

75% of your creditors in monetary value have to agree to it - if more than a quarter of them don’t vote in favour, your IVA will not be accepted and you may have to consider Bankruptcy or a Debt Management Plan instead.

It could take up to 4 months for the creditors records to be updated and for them to stop calling you.

Details of an IVA will appear on your credit file for 6 years from the date it commenced, - after which time reference to the IVA will be removed.

If you don't keep up with the payments you've agreed with your creditors, your insolvency supervisor could put you into Bankruptcy, which will severely affect your future earnings and credit.

It will be more difficult obtaining credit in the future, so it's best to compare all the debt solutions available before you make your final decision on taking out an IVA.

Please remember, the information here is intended as general information and cannot ever replace expert professional advice. For more individual advice take the first step and apply online or call one of advisors on 0800 234 3605.

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