Debt might pose a major to minor impact on a person’s life positively or negatively, depending on how it is actually handled. For instance, some debt, if handled in the correct manner, might build your credit report as well as support you achieve your dreams, like getting on the property ladder. But, if due to any uncertain situation, debts get out of hand, then they can take a toll not only on the finances but also on the physical wellbeing.
Well, in such situations, an IVA may be just what you truly require to regain financial control.
The IVA refers to the Individual Voluntary Arrangement. This is a formal, legally binding settlement procedure that freezes interest as well as charges on the unsecured debts, enabling you to pay your lenders a pocket-friendly amount over a granted period of time. And upon successful completion, any kind of outstanding unsecured debt would be written off. The IVA can protect you from lenders and bankers initiating legal action, like petitioning for your Bankruptcy or making an appeal to Court for defaulting on the monthly payments.
A Brief Overview Of An IVA Pros & Cons
The pros & cons of IVA completely depend on your personal events, but, here’s an overview of the pros & cons we will cover today!
A budget-friendly payment option
Helps to protect your assets as well as property
Lenders should not harass you anymore for payment
The payment is fixed as well as reliable
Charges & interest rates are frozen
It’s completely legally binding
Security from bailiffs & other relevant legal action
Pose major to minor impact on the employment
Affects the credit report as well as credit score
It is not private
It implies following a stringent budget
If you are a homeowner, then you might require to release equity from your house
These are the major PROs & CONs! In fact, if you would like more details regarding the IVA pros & cons, then you can check out the rest of the blog. Our blog will help to let you know each and every aspect of IVA debt!
IVA Pros & Cons:
Major Pros of an IVA
There are a number of benefits to an IVA. So, today, we have outlined the main details of these benefits so that you can find whether an IVA Advice support you:
You only spend what you can actually afford
Your day-to-day living expenses will be considered before the payment to the IVA. Therefore, you can only spend what you can actually afford!
It protects your assets as well as property
Assets & property such as your vehicles or homes are generally protected during the IVA agreement, which implies you will be able to retain these, provided they’re of a reasonable price.
Can’t bother you anymore for monthly payment
Once lenders or bankers have agreed to the IVA proposal, legally they’re bound by the settlement plan & can no longer get in touch with you directly to ask you about the payment. But, you’ll have to deal with the Insolvency Practitioner as well as their staff who will manage the whole IVA & will deal with lenders on behalf of you.
A fixed & reliable payment option
You’ll make a budget-friendly repayment opportunity to your debts in the knowledge that your debt amount is completely fixed. Lenders can’t make any kinds of extra charges or add more interest to the debts when the IVA is approved.
It writes off debt
Generally, the IVAs last 5 to 6 years. And when the agreement gets successfully completed, all the remaining unsecured debt will be written off.
Interest & other charges are frozen
When the IVA gets approved by lenders interest as well as charges are frozen & can’t be added to the debts by the lenders. It helps to prevent the debt from enhancing further.
An authentically binding solution
As we all are aware of the fact that IVA is legally binding, which means when approved, both you as well as your lender need to follow the agreed terms and conditions.
Securance from bailiffs and other legal action
As long as you adhere to all the terms & conditions of your IVA, lenders aren’t enabled to take any sort of legal action against you. It also includes sending bailiffs in order to reclaim the debt.
Decreased social stigma
Although the issue of debt shouldn’t be taboo usually, this might be another better alternative, such as bankruptcy.
Better employment opportunities
Although most of the occupations won’t permit employees to join them if those have been made bankrupt, the same can’t be said of an IVA. Therefore, we would always suggest verifying your employment contract if you were worried that there might be some impact on your job
Cons of the IVA
But, as with any other type of financial product, there are certain negatives to IVAs:
Your credit score, as well as rating, will be affected
The IVA will negatively influence your credit score as well as a rating. The IVA will be shown on your credit report & also will usually remain there for at least 5 to 6 years from the time of approval. As the IVA generally lasts for 5 to years, it means that it is possible to show on the credit report for a further year after successfully finishing the IVA. And resulting, you will possibly find it pretty difficult as well as challenging to obtain future credits or other financial products.
IVA isn’t a private option
When an IVA gets approved by the lenders or bankers, it is shown on a public database that is named as Insolvency Register. And the I solvency Register can be searchable by anyone. Although, in general, the least amount of people are basically going to use this system.
You’ll require maintaining a strict budget plan
Monthly payments to the IVA require to be made. Although the settlement plan is somewhat reliable as well as flexible, you’ll be required to budget for the next 5 to 6 years to assure that you continue making all the repayments.
If you are a homeowner, you might require releasing equity from your house
You might be asked to release equity from your house as part of the settlement plan. If it is not possible at all, the length of your IVA may enhance from 5 to 6 years. But, an IVA might still be a good option for you if you owe money to more than one lender or have accumulated at least 2 debts.
Well, if the amount of your debt is more than 6,000 pounds or you don’t want to contact your lender directly, the IVA can always be the most suitable as a good option for you! Get in touch with us today with any sorts of concerns or queries you have in your mind right now, & we would be pleased to answer them for you.
On the other hand, you can always give us a ring on our customer care number or send us mail at our official mail ID! So, without any kind of hesitation, you can research us at your convenience!
Frequently Asked Questions (FAQS)
Is the IVA Right For Me?
The IVA can be the most reliable as well as a trustworthy solution for you if you’re currently searching for a debt solution that means you need to pay an affordable payment & you are completely free from lenders harassment. Although it can usually look like bankruptcy is the one and only option, the IVA might be more useful for your situation. Of course, can apply online, & upon the successful conclusion will be able to write off any kind of outstanding unsecured debt.
Will the individual voluntary arrangement ruin my life?
An IVA which is also known as individual voluntary arrangement can negatively influence your professional as well as personal life, & make a dent in the credit report. … So, by meeting all the rules and regulations of your IVA, & taking actions in order to rebuild the credit report, you will be able to improve your financial condition in the long run.
Is getting an IVA a great idea?
Certain major benefits of an IVA are: this is legally binding – it means your lender has to stick to it & they cannot chase you for the debt when the IVA settlement process is in place. So, it’s time restricted & you are only required to repay while an IVA settlement plan is in place – typically 5 or 6 years.
How does an IVA affect your life?
Having the IVA settlement plan might impact any future income or even assets that you obtain. For instance, if you decide to shift your property or home while you’ve an IVA in place, any amount you make from the sale may be required to be paid into the IVA. In fact, if your income enhances while you are in the IVA settlement plan, you need to tell your insolvency practitioner.
Does IVA clear debt?
An IVA or Individual Voluntary Arrangement is a formal as well as a legally-binding settlement plan between you & your lender to repay all your debts over a certain period of time. …The majority of the debts can be paid off via an IVA however there are certain exceptions as well
Will I lose my car with an IVA?
So, if you access an IVA, then you will usually be enabled in order to get your car provided that it is important for family transport or work reasons. But here you need to make sure that your car’s value isn’t excessive.
What does an IVA stop you from doing?
You will be required to give information about your financial condition, for instance, your property, assets, income, debts, as well as creditors. … This will be applicable to all your creditors, involving any who disagreed with this plan. The IVA will prevent your lenders from taking any sorts of legal steps against you for your debts.
Do IVA check your bank account?
During the Individual Voluntary Arrangement application, you’ll be expected to go through a number of rigorous affordability checks that include providing account details, wage slips, bank statements,, as well as other required information that enable your IP in order to work out a budget friendly monthly payment plan for you.
Do I have to declare IVA after 6 years?
An Individual Voluntary Arrangement will generally stay on a credit report for 5 to 6 years from that particular date that it is officially registered. … Well it is pretty essential to note that even though your credit report might be clean after 5 to 6 years, bankers often ask borrowers to declare if they have had any sorts of credit issues.
Can I go on holiday while on IVA?
Taking any kind of holiday isn’t prohibited while you are in the IVA settlement plan. Moreover, you will be able to travel across the UK or anywhere else. However, getting the funds to repay for it can be pretty difficult as well as challenging. It means you will need to manage within the restriction of your IVA budget.
What is bad about an IVA?
The IVA, like any other type of Online Debt Advice solution, will pose some major to minor negative impact on the credit report. The lower payments mean not maintaining the contractual settlement with your lender, & the IVA will show on the credit report for 5 to 6 years after the date that it begins.
Can you hide a bank account from IVA?
Of course, the IVA is directly governed by the court & it is absolutely fraud if you want to hide money from them. And to be very honest such kinds of attempts will not go overlooked & you can be punished by the court over the dispute. So, you might even be required to hire a third party organization in order to deal with such a situation (if it comes up), which means additional expenses.