Pros and cons of IVA
At MoneyStand, we frequently talk about debt solutions to offer some advice to anyone landing on the blog looking for some support and advice. Judging by UK debt news, theres been some increases in the amount of people getting IVAs, so this week I’m going to talk about Individual Voluntary Arrangements. An Individual Voluntary Arrangement, or IVA is a formal agreement with your creditors to pay some or all of your debts. An IVA will normally last five years, after which you will be debt free as a large proportion of your debt may be written off.
IVAs offer a number of advantages over bankruptcy. You will probably be allowed to keep your home, you can keep the matter private rather than having it announced in a newspaper, you can still hold a current account (albeit one without an overdraft) and you can still act as the Managing Director of a company or hold a public office. This means that the stigma of IVAs is much less than that of bankruptcy.
However there are also a number of disadvantages. Firstly, an IVA is only an option if you owe more than £15,000, and creditors representing at least 75% of the amount you owe must agree to the IVA arrangements. If your IVA fails you may still be made bankrupt, and the cost of your IVA will be added to your debts. Finally, your finances will be heavily scrutinised by an Insolvency Practitioner, and your IVA will appear on your credit file, thus affecting any subsequent applications for any type of credit.
