If you are an individual in debt you may wish to consider what is known as an IVA (Individual Voluntary Arrangement), more about this specific debt solution below and the reasons why you may wish to consider it as a solution for debt relief.

What Is An IVA?

The IVA is an innovative debt solution that is backed by government legislation that enables individuals with significant debts to become debt free (generally over the course of five years) this effectively takes the debtor (consumer) from being in a position of being harassed endlessly by creditors (the companies they owe money to), to becoming 100% debt free in the space of five years.

What Are The Pros And Cons Of The IVA?

The pros (advantages) are predominantly the fact that your monthly bills are consolidated to the point where the debts are manageable instead of being a threat that could make the debtor bankrupt, also the fact that a legal injunction is put into place meaning creditors have to leave the debtor alone while they make reduced payments towards the debt, and also the freezing of interest and charges to stop the debts’ growing whilst being repaid.

There are other advantages such as the fact that once the IVA is complete the remainder of the debt is written off, in fact the IVA is fast becoming the most popular way to write off debt, in many cases it is very possible to eliminate 85% of personal debts, making people completely debt free in the space of five years.

For more complete information about the IVA pros’ and cons there is a page here that can tell you everything you may wish to know about the subject of IVA advantages and disadvantage when weighing options for eliminating debts.

So the question of “Why should I get an IVA?” is mainly answered by the sheer advantages of being in an IVA, however, another thing to take into consideration is any potential disadvantages associated with the debt help scheme.

IVA Disadvantages

To use the word “disadvantages” may not be the best word to describe the following considerations however for the sake of reference we provide information on what people may perceive as a disadvantage below.

You must make a significant commitment to keeping up with repayments, moderate your personal expenses to ensure you can afford your monthly repayments and also not take out significant amounts of further credit, for example: taking out a £10,000 loan to purchase a new car whilst on an IVA may not be the best choice and your insolvency practitioner may advise you not to, however, there will be ‘wiggle room’ within the IVA for you to make purchases as necessary to lead a normal life.

If you violate the agreed terms of the IVA you may find yourself with a bankruptcy petition, which is something you may wish to think about before entering into an arrangement, however, it is worth remembering, all parties want the IVA to work so your insolvency practitioner will tailor the arrangement to ensure as much as possible it’s affordable and all runs’ smoothly.

The IVA must also be approved by the courts and also 75% of your creditors, so the agreement needs to be crafted carefully with everyone involved in mind.

But remember this is a speciality of insolvency practitioners as they will have extensive experience in dealing with drafting IVA agreements, and once the arrangement has the green light from a majority of creditors and also court approval, it can go ahead and you can reap the benefits of it almost immediately.

Should you wish to enter into an IVA, DebtSolve.The UK is an organisation who can help with this, however, there are other IVA companies that offer a similar service, it is up to yourself to choose which company you prefer to go with.

Published by Mary Fontenot