Individual Voluntary Arrangements | The Pros and Cons

IVA’s are form of insolvency. They are legally binding and it important to understand all the implications before entering into one. Once you are in an agreement you have to stick to the repayment terms to become debt free in 60 months.

Below is a comprehensive list of pros and cons surrounding Individual Voluntary Arrangements;

Pros;

• Eliminates creditor hassle
  Part of the terms and conditions of an IVA are that creditors are LEGALLY NOT ALLOWED to contact you, at all during the 60 month period


• Write off up to 75% of your debts
  IVA’s allow you to completely write off up to 75% of what you cannot afford to repay. Meaning if you owe £50,000 you could end up repaying only £12,500!


• Freezes interest and charges
  All interest and charges are completely frozen during the 5 year period meaning your debts will not increase.


• Debt Free in 60 months!
  You will be completely free from debt in 60 months


• Piece of mind
  You can sleep at night know your financial situation is now back on track and in 60 months time you will be debt free.

Cons;

• Formal Arrangement
  An IVA is a formal arrangement between you and your creditors, meaning that it can be difficult to change once all the new arrangements are in place, unlike a Debt Management Plan which is an informal arrangement.


• No further credit
  You are strictly not permitted to take out any further credit throughout the duration of the plan


• Affects your credit rating
  An IVA, like any debt solution, will inevitably affect your credit rating to some degree. Once the 60 month period is over you credit rating will begin to improve.

If you need more information on repairing your credit rating, there are a number of steps you can take which will improve your credit score. Click here for more details.