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Individual Voluntary Arrangement (IVA) - Pros and Cons

Tuesday, 1st February 2011

2012-iva-prosconsBelow we have given a breakdown of the most popular and relevant Pros & Cons for an Individual Voluntary Arrangement (IVA).

Choosing the best debt management solution to suit your circumstances can be difficult and confusing. What’s best, a debt management programme, an Individual Voluntary Arrangement (IVA), or bankruptcy?

Before jumping into any of these debt management options it makes sense to first investigate the advantages and disadvantages or Pros and Cons of each.

We also have our very own easy to read debt solutions table. This chart illustrates a summary of possible debt solutions, you can compare the options available to you. We detail which options freezes interest and those that can stop the creditors chasing you for the debts.

Debt Solutions Explained & Debt Solutions Comparison Table

 

In this article we look at:

Pros / Advantages

Cons / Disadvantages

Three ways to fund an Individual Voluntary Arrangement (IVA)

Can DebtWizard help decide if an IVA is right for me?

So what are the IVA pros and cons?

IVA Pros / Advantages

  • No publicity in an IVA (no public notices or advertisements)
  • An IVA avoids the potential perceived stigma of bankruptcy
  • An IVA acts as a safeguard to losing your home
  • With an IVA your creditors negotiate with the firm you appoint to help you
  • An IVA will give you protection from any court action taken by your unsecured lenders / creditors
  • Any debts outstanding at the end of the IVA will be written off by the lenders / creditors
  • An IVA is more flexible than a bankruptcy in that you have more control over your assets
  • An IVA will stop the lenders / creditors making demands for payments
  • With an IVA you only pay back what you can reasonably afford
  • You can still hold a current account in an IVA but not an overdraft facility
  • Most jobs, including being a Police Officer can still be kept in an IVA.
  • An IVA may not restrict you from carrying on your business
  • If a creditor fails to vote in an IVA they can still be legally bound by it
  • If a creditor rejects the IVA they can still be bound by it if enough lenders accept it
  • Creditors usually receive a greater dividend than that which they would expect in a bankruptcy
  • You can vary, with lender / creditor agreement, the terns of term of the IVA
  • An IVA allows someone to still hold certain offices, such as director of a limited company
  • There are fewer restrictions in an IVA compared to bankruptcy
  • In an IVA you are still legally repaying your lenders /creditors, albeit at a reduce rate.

IVA Cons / Disadvantages

  • There is no guarantee as to how the creditors will vote in the IVA
  • Your lenders / creditors may want to vary or modify the IVA proposal
  • You will not be permitted to take on more debts whilst in the IVA
  • The repayment period for the IVA is usually 5 years as against 3 in a bankruptcy scenario
  • An IVA is recorded on The Insolvency Service Register, which is accessible by the public
  • Your payments into the IVA may increase if you earn more
  • At least 75% of your lenders / creditors IN VALUE who vote on your IVA proposal will need to accept the IVA
  • The IVA will remain on your credit report for 6 years
  • Failure to comply with the terms of the IVA may result in eventual bankruptcy
  • You will need a certain level of debt before you can propose an IVA
  • You will need to get a new bank account with a bank that does not feature in your IVA
  • There are restrictions on the expenditure of a person who enters into an IVA
  • Only the unsecured debts within the IVA are discharged. Any others are not.

Three ways you can fund an IVA

  • You pay monthly
  • You pay monthly plus your share of any house equity in the final year, if possible
  • You make a one off lump sum offer with no monthly contributions.

Can DebtWizard help decide if an IVA is right for me?

To find out if you qualify then telephone DebtWizard.com

  • 03339 870 180 (Mon to Thu 9.00am - 8.00pm, Friday 9.00am - 6.00pm)
  • Or complete the rapid debt help form and we will call at a time that suits you

Need more IVA information on Individual Voluntary arrangements (IVAs)

Take me to - What is an Individual Voluntary Arrangement, IVA?

Take me to - IVA Information / Advice - Questions & Answers

Take me to - IVA Fees

Take me to - IVA v Bankruptcy, the answers to questions that most worry consumers

 

 

 

 

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