IVA or Individual Voluntary Arrangement has been emerging as a go-to debt solution for many households in the UK who are suffering from debt. COVID-19 pandemic has resulted in emotional and financial suffering that refuses to fade away. You have to think hard before deciding if IVA or any other debt solution is best for your unique life situation.
Individual Voluntary Arrangement or IVA is a legally binding agreement between all your creditors and yourself stating that you will clear your debts in five to six years. The court approves every IVA, so all creditors abide by it.
When you are in serious debt, it is natural to look for debt solutions that make sense. There are a variety of debt solutions in the market that include debt management plans, debt relief orders, bankruptcy and IVA.
Among these options is the one that will suit you best as you take sensible steps to handle your debt problem.
Is An IVA Best For You?
You need to first ask important questions before getting into an IVA. These questions will help you know about all those options if you encounter problems when entering an IVA or at the end of the IVA.
You need to understand clearly that an IVA is a kind of insolvency like debt relief orders and bankruptcy. It may be a good debt solution if you have some assets that you would like to protect.
What are some advantages of an IVA?
1-Affordable payments: All the payments that you make into an IVA are dependent on affordability. This ensures that your IVA becomes successful. You are protected from having to make payments that you cannot afford to maintain.
2-Fixed duration: Your IVA has a fixed duration, which is normally about 5-6 years. You make payments in this timeframe. Then under the IVA terms, any outstanding debt after the IVA duration gets wiped away.
3-Legal action is stopped: Once the majority of your creditors accept an IVA at the creditors’ meeting, then all creditors forfeit any right to take legal action for debt recovery.
4-Interest charges stopped: Once the IVA has been accepted by your creditors, then they cannot add further interest charges to your debt.
IVA Facts That You Cannot Ignore
Since the IVA continues for five to six years, you need to keep in mind life situations that can change entirely during this time. These life changes can be:
2-Going into a new house
3-A car finance contract coming to an end
5-A child who is no longer a dependent or his age is 19 years
The accepted market advice is that these life changes should be complete before considering the IVA option. Then you also need to list out clearly in your IVA all the different debts you owe to creditors.
The difference between bankruptcy and IVA is that bankruptcy will wipe out your debts completely. However, you have to list out all your debts in IVA, or they do not get included.
Getting the services of a good IVA firm helps you understand the fine print of choosing the IVA option. But it is your responsibility to ask as many questions as possible and do your online research on IVA. This knowledge guides you and tells you exactly what type of commitment you are getting into with an IVA.
These introductory pointers hopefully got you thinking about whether your need an IVA debt solution or not. Keep making rational decisions and lead a stress-free life.
Why not subscribe to our newsletter and keep in touch with what we have to share with you every month. We would love to hear your own opinions on our posts.
You can even comment below about this post. We are listening. Go ahead.