Could an IVA help you?

An IVA has become an effective alternative to bankruptcy for those that are struggling to meet repayments on their unsecured financial commitments, although it is still a process that should not be entered into lightly.

It is important to consider the pros and cons of an IVA in order to determine whether it is the right route for you, and you should also look at other options that are available to you in order to help you to reduce your monthly repayments and manage your debts more effectively.

Conditions of entering into an IVA

There are various conditions attached to entering into an IVA, and it is these conditions that will determine whether you can successfully enter into this type of arrangement. These include:

• You or your partner (if part of the IVA) must be in full time employment
• You must have unsecured debts of at least fifteen thousand pounds
• There must be a majority vote to accept the IVA from your creditors, otherwise another solution will have to be considered.

Benefits of an IVA

There are a number of benefits to entering into an IVA, and some people may find that this is the ideal solution to help them to get out of debt more quickly as well as to keep monthly repayments down. These include:

• Making one convenient repayment each month
• Making a payment that is affordable based upon your income, outgoings, and expenditure
• Making a set repayment each month, which will not fluctuate, hence easier budgeting
• Balance of debts being written off after sixty months
• Not being hassled and threatened by creditors, as this is a legally binding agreement

Disadvantages of an IVA

There are also a number of restrictions and disadvantages that come with an IVA. These include:

• Debtors have to be in at least fifteen thousand pounds worth of unsecured debt, and must be working full time in order to qualify
• The proposed arrangement must be accepted by the majority of creditors (at least seventy five percent)
• An IVA can have a significant adverse effect on your credit report and rating, thus affecting your financial future
• The IVA is a legally binding agreement and must be adhered to throughout the term. Failure to do this may result in bankruptcy and additional costs.