IVA pros and cons, this page explains some of the key pros and cons of the IVA (Individual voluntary arrangements), advantages and disadvantages in enough detail to give the reader an understanding of the IVA and some of the benefits & how it can help them.
The individual voluntary arrangement is a formal debt arrangement designed to help people write off debt by giving them a new arrangement where they can make more manageable monthly repayments to their creditors, after a certain amount of time has elapsed.
Pros And Cons Of The IVA – What Are The Advantages And Disadvantages?
Pros of an IVA:
Consolidated repayments, monthly repayments are made more manageable and affordable
Legal protections against creditor hassle, creditors cannot contact you if you are on an IVA (creditors can’t hassle you when you’re on an IVA)
Bailiffs unable to visit your property, not allowed to visit and must deal with the appointed representative as opposed to contacting you directly
All interest is frozen along with any charges, so the debts cannot grow passively as a result of the compounding effect of interest accrued and any compounding charges over time.
Up to 85% of the debt can be written off, whatever the remainder of the debt is after the IVA is completed is completely wiped clear.
Once the debt is written off you are totally debt free, there will be no further hassle from creditors or bailiffs as part of the scheme
The IVA is government approved meaning it is written into law which is a major advantage of the debt scheme.
The IVA doesn’t require you to sell your assets to repay your debts like with for example bankruptcy.
Cons of An IVA:
Requires fiscal discipline for a period of 5 years
Must still pay a certain reduced amount towards debts each month
Need at least £100 in disposable income monthly
For a more complete guide on the iva pros and cons see this page.
The pros and cons of an IVA are many and varied, however there are generally more advantages to be seen from this powerful debt solution than there are disadvantages, the IVA has a lot of legal support from the insolvency act 1986, and the legislation from which makes it legally binding.
The IVA pros and cons are not the only thing to consider when applying for an IVA, another thing to think about is whether or not you qualify, you must have at least 2 creditors and more than £5,000 worth of debt for an IVA to make sense financially.
Also required is a minimum £100 per month of disposable income.
How Can I Maximise My Chances Of Qualifying For An IVA?
Try to ensure there is at least £100 of spare income each month to cover debt contributions and adhere to the above criteria, if you are not sure there are agencies you can contact for free advice and help, also there are companies that offer IVA’s who can give you further information on IVAs.