What is an Individual Voluntary Arrangement (IVA) – A Closer Look

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Those who would like a smarter way to deal with debt may be interested in obtaining an IVA. It’ll protect your assets against loss and help you avoid bankruptcy. An IVA stands for Individual Voluntary Arrangement. It’s a private contract that’s held with you and whoever your creditors are. 

It depends on you when considering how much to pay into your IVA Plan. Whether it’s a good idea or not is largely dependent on personal circumstances. 

How an IVA works

Most people put in what they think they’ll be able to pay back. You should put the maximum amount of money possible. Those who get an IVA should opt in for monthly payments. People tend to pay into them for around five years. 

Regular payments are made to what is known as an authorized debt specialist. They may be referred to as an insolvency practitioner. This money floats between your creditors as consented by your IVA.

Once you’ve finally made all of your IVA payments, and if they cooperation has been full, all the terms have been granted, you’ll see any debt you may have remaining paid off. 

Should I Make the Move? 

Remember to take careful thought before entering into any arrangement. Those who enter into an IVA should understand the importance of being fully committed to entering payments. 

If you think this all applies to you, you should consider exploring IVA as a solution for your debt

Consider it if one of the following applies to you:

  • You struggle to pay your debt on time;
  • Your debt exceeds £6,000;
  • You owe money to a minimum of one creditor and have at least two lines of credit open;
  • You have a budget that surpasses £100.
  • Be sure to get the right advice as it pertains to your options when considering an IVA

Enjoy all of the benefits of an IVA

  • Enjoy a stress-free life away from problematic debt;
  • Creditors will no longer harass you when you opt into this private and legally binding contract;
  • Any charges and interest will be frozen once you’re approved for an IVA;
  • You can choose between making one payment or making payments at a frequency;
  • Some of your debt will be written off;
  • You’ll get advice from a supervised Licensed Insolvency Practitioner;
  • When choosing an IVA, you’ll get a defined beginning and understand when it ends;
  • A calm feeling knowing that you can start fresh in a debt free life;
  • *Everything depends on individual circumstance  

Disadvantages That Come with an IVA

  • Those who don’t make their payments on-time might have an IVA that fails;
  • Any credit that you might have during the course of your IVA will not be availed;
  • You’ll see some impact on your credit rating.

Final Thoughts on the IVA

The IVA is an excellent option for those who can’t pay off their debt in full. It’s a great way to get out of debt without facing bankruptcy and all its consequences. While there are advantages and disadvantages, it’s best to weigh them both before signing up for an IVA. Consider consulting with your creditor or a debt specialist before making a final decision. These professionals can help you decide whether an IVA is the best option for you. Keep in mind that your credit rating will be impacted, but that isn’t necessarily a bad thing. Once you begin making your payments on time and manage to pay off all of your debt, you can move forward with a fresh start and a better credit score.

Good luck on your journey toward financial freedom!

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