If you are currently considering an individual voluntary arrangement to handle all your debt, today’s guide aims to answer, as comprehensively as possible, all the major aspects including the pros and cons of apply for IVA you will require to know.
What are the IVA Pros and Cons UK?
An IVA is a settlement agreement between an Individual & their creditors. An individual can make a proposal offering monthly payment plans over a 1-5 year period or maybe offering a lump sum amount. The IVA might need lenders to compromise on their debt to receive a pence in the pound distribution.The individual voluntary arrangement is a binding agreement that can be applicable for all lenders & requires acceptance at the lenders’ meeting of nearly 80% of lenders voting in favour of the Proposal.
The Insolvency Practitioner (IP) acts as a Nominee in presenting the settlement plan to lenders & then if acknowledged will act as Supervisor of the Arrangement.This is pretty essential that the Insolvency Practitioner should assure that the Payment proposal is achievable & a good balance is struck between the debtor & the lender.
Why may an Individual Propose an IVA Pros and Cons UK?
- The debtor might have got a bankruptcy or statutory demand petition from a lender & an individual voluntary arrangement may provide a better outcome for creditors than accessing the Bankruptcy.
- An undischarged bankrupt may seek to annul the bankruptcy by accessing the Individual Voluntary Agreement.
- Being a professional (e.g. solicitor or accountant) if you want to go for bankruptcy, it could hamper your office & therefore an IVA may be a good alternative to assure that they continue in employment.
- The debtor might have problems in keeping up with loans, credit cards debts, & other monthly expenditure & an individual voluntary arrangement might offer a mechanism to provide a coherent monthly payment plan & freeze interest.
- The debtor might be in a DMP settlement program & an IVA might offer finality in dealing with the lenders apply for IVA.
An overview of individual voluntary arrangement IVA Pros and Cons UK
The individual voluntary arrangement IVA Pros and Cons UK actually depend on the debtor’s personal situation, but here is an overview of the IVA pros and cons and How To apply for IVA!
The IVA Pros and Cons UK depend on your personal circumstances, however here’s an overview of the pros and cons we’ll cover in this article.
Pros of IVA-
You only pay what you can afford
Your day to day expenses will be considered before the payment to your IVA.It protects all the assets Different assets like your house, car are protected during the IVA settlement, meaning that you’re able to retain all these assets, provided they’re of a reasonable price.
Bankers cannot harass you
When bankers have agreed to the IVA settlement proposal, they’re legally bound to maintain the decorum & can no longer reach you directly to request payment. But, you’ll need to deal with the Insolvency Practitioner & the IP will deal with the banker on your behalf.
A reliable, fixed monthly payment
You can easily make a reasonable payment to your debts in the knowledge that your debt amount is fixed. Creditors cannot make additional charges or add more interest to your debts once the IVA is approved.
- An affordable payment
- Protects your assets
- Creditors shouldn’t harass you for payment
- The payment is fixed and reliable
- Interest rates and charges are usually frozen
- It’s legally binding
- Protection from bailiffs and other legal action
A fixed, reliable payment
You will make an affordable repayment to your debts as your monthly payment plan is fixed. Bankers cannot add more interest or make any kind of extra charges or to your debts when the IVA settlement program is approved.
Monthly charges & Interest rates are frozen
When the IVA settlement program gets approved by the banker, monthly charges & interest are frozen & can’t be included in the debts by your lender. It helps prevent the debt from enhancing in the near future.
A legally binding plan
An individual voluntary arrangement is legally binding, so that once the plan gets approved, both you & your banker will follow all the agreed terms & conditions.
Protection from bailiffs as well as other legal action
As long as you follow each & every terms of your IVA, lenders aren’t enabled to take any sorts of legal steps against you. It also includes sending bailiffs to reclaim debt.
Decreased social stigma
lthough debt shouldn’t be a taboo generally, it may be an individual voluntary arrangement that is generally considered better than some of the other alternatives, like bankruptcy.
Cons of IVA-
But, as with any other service or product, there are certain drawbacks as well. Some of the major ones are-
Your credit score will be influenced for sure Like any other settlement plan, IVA will also pose a negative impact on your credit report. When you enter into a IVA settlement program, it will be registered on your credit report & will remain there for at least 6 years. Therefore, you’ll possibly find it pretty difficult to obtain other financial products or future loans.
- Effect on employment
- Affects your credit rating
- It isn’t private
- It means following a strict budget
- If you’re a homeowner, you may need to release equity from your home
If you’d like more information on the IVA pros and cons for you personally, you can click below to submit some information about your circumstances.
It isn’t private When an IVA gets approved by lenders, it is registered on a public database named the Insolvency Register. Well, it can be searchable by anyone. Although, in practice, certain people are usually going through the system.
You will require to follow a strict budget
Monthly payment needs to be made on a regular basis. Although the settlement agreement is somewhat flexible for sure, you will require a budget for the next few years to assure that you continue making monthly payments.
And in the case of a homeowner, people might require to release equity from their home.If the total debt is over 6,000 pounds or you don’t want to directly deal with your banker, an Individual Voluntary Arrangement could be the best bet. Get in touch with us today with any concerns or queries you’ve regarding ‘individual voluntary arrangement register’ or need of any kind of stepchange iva contact number, & we would be delighted to answer them for you.