IVAs - The Pros and Cons

If you are experiencing financial difficulties and are looking for a way to reduce pressure from creditors and make your monthly loan repayments more affordable then entering into an IVA may be a suitable solution.

It is however important to be aware that individual voluntary agreements are not the best option for everyone. You should always familiarise yourself with the details of any financial agreement and check you understand and are happy with the conditions before you commit.

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Advantages of an IVA

An IVA can help you to repay your debts on an affordable basis with one monthly payment.

As an IVA is a legal agreement, as long as you meet the necessary repayments, your creditors are unable to charge you additional interest, commence legal proceedings against you or declare you bankrupt.

At the end of the IVA term, all remaining debts owed to the creditors specified in the IVA will be written off.

Unlike bankruptcy, your employment or professional status will not be affected as there is no obligation to inform your employer.

An IVA is agreed on the basis of a fixed term and a single, fixed monthly repayment so you know exactly what you owe and when you'll be debt free.

IVAs are flexible enough to allow you to pay off the agreed amount in one lump sum if you have the funds to do so.

After the completion of the IVA term, there is unlikely to be any long term impact on your ability to borrow further funds.

Coming to an IVA agreement with your creditors does not prevent you from running your own business or becoming a company director.

Become Debt Free after just 60 months!

Disadvantages of an IVA

If you do not meet your monthly repayments, the IVA may be revoked. Potentially this means that your creditors will be able to request the original amount owed in full, they may begin legal proceedings against you and you may be made bankrupt.

You may be requested to release any equity held in your property or in any valuable assets that you own as part of the IVA.

You will not be able to undertake any unsecured borrowing whilst you are bound by the IVA; this includes additional loans and credit cards. Your bank account can be affected.

The amount offered to creditors as part of your IVA must be more than they would receive should they make you bankrupt as this is a possible option.