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IVA Pros and Cons

Tuesday, 1st February 2011

2012-iva-prosconsIVA: Pros and Cons of an Individual Voluntary Arrangement

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.

To clarify, we’re talking about an IVA, which you pay into and fund in one of three ways:

  • 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.

DebtWizard.com believes in providing an ethical and transparent service, you can view in more detail how the website is funded and the fee arrangements for an Individual Voluntary Arrangement (IVA) - Fees

So what are the IVA pros and cons?

Advantages / Pros

  • 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.

Disadvantages / Cons

  • 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.

There are many IVA pros and cons, but we’ve covered the most important ones.

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 or have a question about the pros and cons of an IVA? Visit our forum

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

Take me to - IVA Information

Take me to - IVA Fees

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

Back to the main Individual Voluntary Arrangement (IVA) page

 

 

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