Introduction to IVA FAQs

If you are going to have to take out an IVA – Independent Voluntary Arrangement – there will be a lot of things you will need to know. This is where the IVA FAQs come in handy.

Will I Qualify?

If you owe more than £15,000 to three or more creditors then you will have a chance to apply. It will depend on your circumstance if you are accepted. You will have to give details of all your finances both incoming and outgoing. Once it has been decided what you can realistically afford to pay each month your creditors will be asked if they agree. As they know that refusing could lead to you becoming bankrupt and therefore unable to pay them anything they will more than likely accept any reasonable offer.

What Are The Benefits of an IVA?

  • Interest will be frozen so your debt is not going to be increased even though you are not clearing things such as your credit card each month.
  • You will not have to pay the full amount you owe. Although each case is different in some case you do not repay 75% of the debt.
  • You no longer have to deal with your creditors. Your advisor will deal with all calls and correspondence giving you peace of mind when you answer the phone or pick up the mail.
  • You know what will be paid each month, any change in circumstances must be passed on and it may be possible to reduce the payment. It will certainly be possible to increase the payments and pay it off more quickly.
  • As long as you make your payments the creditors cannot change their mind and ask for more.
  • No one else needs to know your circumstances, as this is not a thing you need to tell most people – certainly your employers do not need to know.
  • You can still open a basic bank account and use a credit card for certain things. This will mainly be for business expenditure that helps you keep working, but it is better than you can do with other options.

What Are The Disadvantages of an IVA?

  • If you fall behind with payments your creditors can ask for all of the old debt to be repaid.
  • If you have equity in your house you will have to remortgage and pay some of that towards the debt.
  • You know you have this debt for at least 5 or 6 years. However, to have taken this path it must have been decided that it was the best option in the first place.
  • The IVA will be on your credit history for at least a year after you finish paying.
  • You cannot borrow further so if there is any work that needs to be done to the house or cars that need replacing it will have to wait.

You will be given all the information you need before you sign the agreement. While this option is not best for everyone, it has proved to be successful on many occasions and it has stopped people from being declared bankrupt. The fees that you have to pay to your advisor will be taken into account when the amount to be repaid is decided so there will not suddenly be a bill you were not expecting.

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