IVA – The Advantages and Disadvantages debt-simple

IVA – The Advantages and Disadvantages

Advantages

Interest and charges are frozen

In an IVA all your interest and charges are guaranteed to be frozen.

Reduced monthly repayment

You only pay back what you can realistically afford and this is agreed with your creditors in your proposal to them.

No further action from creditors or court

Providing you keep to the terms of the arrangement, you will be protected from any further court action from your creditors. They will also be prohibited from contacting you by telephone or letters and are bound by the terms of the IVA.

Debt free in 5 years

Once the arrangement is successfully completed your debt will be written off, giving you a fresh start.

Avoid bankruptcy

For anyone who cannot go bankrupt because of their job or who does not wish to apply for bankruptcy, this is the best option for them. An IVA is not published in your local newspaper, unlike bankruptcy.

Legally Binding

Once an IVA is in place your creditors cannot refuse or change their minds about the payments they receive.

Disadvantages

Tied into contract

If your circumstances change you are bound by the IVA term to continue making the agreed payments, these cannot be altered.

Difficult to obtain further credit

You may have difficulty obtain any further credit in the future; this can be a long term basis.

Minimum level of debt

Normally you will only be able to undertake an IVA if your total unsecured debt is more than £15,000

Must include all creditors

All creditors must be included and you cannot make separate arrangements with each one

Possible release of equity in property

If you have any equity in your property or any other significant valuable assets, you may be required to release some or all of this as part of the IVA agreement.