IVA: 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.
With the insolvency team supporting debtwizard.com you will not be asked to pay upfront fees instead they will be drawn from your monthly contributions. There will be no additional cost.
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 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 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 kept in an IVA.
- An IVA will 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 length 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 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 may need to get a new bank account with a bank that does not feature in your IVA
- Some IVA firms will charge you upfront fees, find one that does not. (We don’t)
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?
If you would like to discuss your personal circumstances, in total confidence, and to find out if you qualify for an Individual Voluntary Arrangement (IVA) then telephone 0800 197 8433 8am - 9pm or complete the rapid response form and we will call you.
If we can help you propose an IVA then you will not have to pay up front Nominee fees, instead the fees are taken with the creditors consent from contributions that you pay into the IVA. More on fees and how debtwizard.com is funded - here
Need more IVA information or have a question about the pros and cons of an IVA? Visit our forum
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