What are the Pros and Cons Associated with Individual Voluntary Agreement (IVA)

iva pros and cons

The nature of IVA is to hold on your debts that are to be paid. Previously, IVA was usually used in business, but now people can easily avail it for their personal purposes. Moreover, IVA also delivers you the protective shield against the legal actions like bankruptcy, court notices, payment defaults and others, taken by the creditors. 

IVA is a process that can help you to take over your lost financial control. So, before availing its service, get to know its advantages and disadvantages, as these are necessary. With the help of this, you can well judge your debt-repayments and current financial situation and decide your next step. So, let’s get to know the IVA pros and cons in detail.

IVA: Advantages 

Here is the list of advantages associated with IVA. Having a large amount of debt can be a nightmare, and this is where IVA comes to work. Both IVA pros and cons are equally important, but at first, get to know about the positive way outs.

1. The Elimination of the Debts 

IVA will provide you with additional assistance in clearing off the debts. Things will be much different after opting for an IVA plan. The time span of IVA is bounded to 60 months, which is 5 years. 

During this period, you don’t have to take any kind of headaches regarding the payment of debts. A reasonable percentage will be given to you and according to that, you have to make the payment, on a monthly basis. When this period is over, you will be free from all your debt. 

2. No Interference of the Creditors

Are you really tensed about the arrival of bailiffs? Then, IVA will protect you from it. After accepting a plan of IVA, your creditors have no right to force you for the debt repayment. In addition to that, during the IVA period, you will not receive any type of text messages, emails, calls, letters, surprise visits and hassle from the creditors. 

If your creditors accidentally visit you, then necessary IVA papers will be there to protect you. Show it to them and ask them to stop their activities. If they don’t listen, legal action will be inevitable. 

3. You have to Pay Once

When you have more than one creditors, then the IVA will play its dominant role. All of your debts will be consolidated by the IP (Insolvency Practitioner) by calculating one minimum payable amount. Just pay it to your IP and he/she will divide it amongst all of your creditors. In the generalized view, with the overall guidance and being a part of IVA, the lowest amount starts from 70 pounds per month. 

4. No Interest and No Additional Charges

The amount of interest and other additional charges will face a halt. Otherwise, the payable amount can turn into a large sum of money, and you can face a hectic situation. IVA helps you to combat these situations. As you don’t have to give the additional charges, the payback amount of the debt becomes cheaper. 

5. Protection to your Assets 

Several creditors might demand the mortgage of your assets when you are late for debt repayments. But, IVA will help you tackle every matter. On an IVA approval, there are no rights of the creditors to ask you regarding any type of mortgages. In addition to that, they will also never ask you to sell your property for the quick debt-repayments. 

IVA: Disadvantages 

Detailed information about the IVA pros and cons can help you to decide, whether you should or shouldn’t go for an IVA. After knowing about the advantages, it is important to heed towards the disadvantages.

1. The Credit Score: A Negative Impact 

You gain certain points on repaying the credits on time. But, on availing the IVA, it isn’t going to be a private matter, and everyone will get to know about it. All the creditors will eventually know how much struggle you have gone through while paying back the debts. 

Considering as insolvent in the credit report, the deterioration will take place in terms of the credit score. If this continues, then you will face many difficulties in picking up the credits, in the near future. Somehow, if your future credits get approved, then the interest rates will be higher than usual. 

2. Selective Debts 

Never think that all of your debts will be included in the IVA. There are some exceptions regarding that. The IVA will not cover student loans, fines issued by the court, support for children and their maintenance, loans for funds and others. That is why you need to repay all of these debts as decided by the arrangements. 

3. The Extension of Equity

The number of equity assets present in your home might be at risk as you might have to release some of it. This will take place at the final stage of the IVA. If you cannot do this, then your case for the debt-repayment will get enhanced to another 12 months, automatically. 

4. The Necessary Eligibility Criteria

Everyone cannot afford an IVA. There are some rules and regulations, as well as criteria that you need to follow. If your debts are more than 5000 pounds, with more than 2 active creditors, then only you are well eligible for IVA. Moreover, your source of income must be on a monthly basis. 

5. The “Must Pay” Monthly Payment

While the IVA is active, a certain monthly payment is necessary. You have to pay that amount at any cost to the IP. In case, there is a missing payment, the cancellation of IVA will be inevitable. Therefore, as per your earnings, calculate the amount and keep it safely for debt repayment purposes. 

6. The Cost of IVA

IVA doesn’t come free of cost. The fees will solely depend on the amount of money that is still pending as a debt. The larger the amount of debt, the fees will also get its extension. That is why, before affording the IVA, make sure that you talk about the fees, as soon as you join the IVA company representatives. This helps to clear the fact about IVA pros and cons. Only after that, come to a decision. 

7. It’s Not Private, but Public

Receiving the facilities of IVA will highlight the agreement made, on the public database. This database is known as the Insolvency Register in the United Kingdom. So, the one, from whom you might be planning to receive credits, can easily view the entire credit status. Moreover, they can also search for further details from you. If this happens, then you might not get credits from anyone, in the near future. 

Summary… 

Hopefully, you have got a good idea about IVA and its pros and cons. Moreover, you might have received a brief knowledge about how the IVA will help you regarding the debt-repayments. In order to calculate the IVA, you can use some free IVA calculator applications present on the web. But, if possible, select a good and reputed IVA organization without any type of compromises. Are you in a debt and still wondering what to do next? Start right now by availing the IVA as you already know about the IVA pros and cons.