Many people in the United Kingdom at present are discussing the merits of the IVA, the pros and cons of this particular debt solution are numerous and in this article we will discuss in more detail exactly where the advantages and disadvantages lie.
So what are the pros and cons of the IVA?
We will start with the disadvantages
The only real perceivable disadvantages with the individual voluntary arrangement are basically the restrictions and also The Commitments you have to make in order to make the IVA work for you and help you to become debt free.
You need to be committed to Keeping Up With You on new consolidated monthly repayments, because if these repayments are broken and the schedule is broken then the IVA can be considered invalid and you may well be facing a bankruptcy petition, which is where your creditors apply for you to become bankrupt full stop
Also with an IVA it is not possible to get credit in the same way as if you had a good credit rating, however in most cases if someone is in a situation where they are considering an IVA in order to remove insurmountable levels of debt their credit rating is probably in a bad position in any case, so this issue should not be attributed just to the IVA with the situation in general.
Another disadvantage of the IVA is the fact that if you have a windfall, or if your financial situation improves perhaps due to an increase in earnings or a pay rise or other factors which may increase your income this needs to be declared with the insolvency practitioner in order to ensure there are contributions made towards your debts, some people would see this is only fair however there are people that would see this as an unfair the stipulation, however this is one of the many stipulations included within an individual voluntary arrangement.
And now onto the advantages of the IVA
All interest and charges are frozen as standard when you enrol on an IVA.
Your creditors also have a new point of contact known as your insolvency practitioner who acts as your representative for all matters relating to your debt including any issues, renegotiations, or correspondence of any type you have a representative there who will help with any and all of these issues so you don't have to
They are also relatively easy to setup, only taking between 3 to 4 weeks in many cases
Perhaps the biggest advantage of the IVA is the fact that you can write off up to 85% of your personal debt within five years, all you must do is keep to the repayment schedule as stipulated in the IVA proposal and agreed by the creditors and the courts and in most cases the remainder of the Debt after after the end of the 5-years Is completely written off. (in some cases if there is equity in your property you may be asked to remortgage but this is not a necessity).
What is this I hear about the IVA being government-backed?
Yes the IVA is a debt solution that is backed by legislation set by the government in the year 1986 known as the insolvency act.
The IVA is recognised by the government has a valid that solution for insolvency and thus can be used legally to write off debt.
The government IVA debt help scheme is fast becoming one of the most popular schemes to release you from debt which is even more powerful than the debt management plan.
If you are struggling with debts and you wish to protect your assets using the IVA then it is important to weigh up the pros and cons of the arrangements before making such a decision.
There is a wealth of information out there about any advantages and disadvantages so you will have ample opportunity to assess this debt solution before signing up.