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Individual Voluntary Arrangement — Worthy Or Unworthy?

Is an IVA worth it?

The Individual Voluntary Arrangement (IVA) acts as a bridge between you and the people who owe money, regarding debt repayments. On the other hand, the IVA also restricts the demanding pace of the creditors, by ensuring certain strict actions and laws in your favour. But, there are also some consequences that always work. 

Do you really think that you should avail of IVA? Is an IVA worth it? These questions always loom in your mind when you are having a lot of debts. Experts say that if you are having debts with zero security, then IVA is much necessary for you. So, let’s check out whether you should go for IVA, based on your current circumstances. 

The First Look of IVA: Pros and Cons

To know whether the IVA is suitable for you not, you have to get a brief idea about its pros and cons. Without further ado, let’s check them out: 

Pros

  • Affordable payments on a monthly basis
  • The assistance of IP (Insolvency Partner)
  • No demands from the creditors
  • Zero interests and additional charges
  • Prevents bankruptcy 

Cons

  • Equity assets might be at risk
  • Transactions greater than 500 pounds with a credit card are unacceptable
  • Selective debts are included in the IVA
  • Hampers your credit score
  • The appearance of your name in public Insolvency Register

The Costs of IVA 

A well-trained and qualified IP is required for the IVA. Obviously, he/she will not work for free. On the other hand, the cost will depend upon the entire debt amount. The bigger debts will result in more intervention by a skilled IP. When the face-to-face agreement is done regarding the payment in instalments, the payment of IVA must be done on a monthly basis. On the other hand, you will feel relaxed about debt-repayments. So, is an IVA worth it? Yes, this is indeed a positive aspect. 

Several Risk Factors 

Assets with zero equity might be at risk on availing the IVA. If your house has its equity, then it has to be kept as a re-mortgage. The price regarding the re-mortgage is the additional profit that you receive from your home. If you cannot do that, then an additional 1 year is mandatory for the overall repayment of the debts. And, if you fail to pay that, then the sad news is, your house will be taken away. 

IVA: The Considerable Factors

Understanding some considerable factors of the IVA will help you to decide — Is an IVA worth it? They are here as follows. 

  • Qualifying for the IVA

From the place where your daily earning arrives, it will pose a huge impact upon qualifying for the IVA. If the income is sustainable, then only you will be able to go for it, otherwise not. The amount of debt must cross more than 5000 pounds. In addition to that, if there is a presence of more than 2 lenders. 

  • The Debt Quantity to be Written Off

Not all the debts fall in the category of IVA. There is a certain boundary regarding that. Your personal loans, bank overdraft, gas, water and electric bills, other loans can come under it. On the other hand, mortgages, support for the children will not come under the IVA. So, look before you leap.

  • The IVA Validity

The IVA generally lasts for 5 years. But, depending upon certain consequences, it will give you an extra 12 months period to clear off all the debts. If you have any other thought about the time-span, then a Debt Relief Order might be a suitable option for you. 

The Restrictions you can Face

  • Effect on the credit rating for the next 6 consecutive years
  • A budget packed amount upon the terms and conditions
  • On accidental skipping of any payment, the time span will extend
  • Service details will be required for a successful IVA agreement
  • Several restrictions on credit purchases
  • On savings and earning bonuses
  • Your name will be listed on IIR (Individual Insolvency Register)

Other options apart from IVA

Still thinking is an IVA worth it? There are also other facilities available if you are not interested in IVA. They are like applying for bankruptcy, getting a Debt Relief Order and building up a debt management plan. But, do you know when to do it? 

Regarding Bankruptcy

You can only apply for bankruptcy when you don’t owe any assets. On the other hand, the application will also work if you are having a home that has less value compared to the debt. This category of assets has negative equity. 

Get a DRO (Debt Relief Order)

Without having your own house and if the debts you owe is more than 20,000 pounds, then you can easily apply for a DRO. 

Build up a DMP (Debt Management Plan)

The DMP will help you in staying relaxed by paying a small amount to the creditors. They cannot force you to pay their selective amount at any cost. The terms and conditions are there to protect you.

Is an IVA worth it?

Lastly, what is your point of view regarding IVA? Is it worthy or not worthy at all? Depending upon the entire circumstances based on your financial matters, it’s you who have to decide. Take the advice from several debt experts, consult with them and then take the ultimate decision.