IVA Credit

Introduction to IVA Credit

There are many things that people do not know about IVA’s and debt management in general. Although there are a lot of people in debt in the UK, only a small percentage of them really know anything about debt management and all of the options given to them. The truth is that people are generally still scared in a way of debt management, even though it has been with us for quite some time now. Generally speaking, this fear is somewhat explicable by the fact that there have been a lot of debt management companies in the UK and all over the world who have done far more bad than good things for people who decided to use their services.

There are still debt management companies today who are in the business of scamming people, and rather than helping them get out of debt, they push people deeper and deeper into it. However, there are debt management companies that have proven to be efficient and honest, and have helped a lot of people overcome their difficult financial situations. The main thing to consider when choosing a debt management company is is it well known and does it has good reviews by previous clients?

IVA Credit – How Does an IVA Affect the Credit Rating?

Owing to the fact that an IVA is an alternative to bankruptcy and that it is used to avoid bankruptcy, it is unreal to expect that it will have no impact on the credit rating. Namely, the IVA itself does not have a bad effect on the credit rating of the debtor. However, the things that lead to the necessity of the IVA, such as missing repayments, do have a real impact on the credit rating. There are two main things that can happen before a debtor applies for an IVA, and these two are the most common reasons why so much people who apply for an IVA have a bad credit rating afterwards.

The first thing is the fact that people who apply for an IVA breach the terms of the original unsecured credit agreement, meaning that they enter into a new financial agreement. This results in a Default Notice, which will have an impact on the credit rating of the debtor. The second thing is a CCJ (County Court Judgement), which is court action taken by the creditors because the debtor missed out on several payments. Both of these will have an effect on the credit rating and they will stay there for the duration of six years. Considering that all of these things become futile as soon as an IVA takes place, they will only be a problem after the IVA plan is completed, in five years.

IVA Credit – Conclusion

All in all, an IVA will not have any permanent impact on people’s credit rating, and after the IVA plan is carried out, people will have to wait one year before their credit rating is back to where it was six years ago. However, even though the Default Notice and the CCJ have an impact on the credit rating, people can still apply for a loan regardless of the fact.