Is an IVA the best option?

If you find yourself falling into debt, then one of the options you might consider is an Individual Voluntary Arrangement (or “IVA”)

An IVA is a formal (and legally binding) arrangement which can help you reach an agreement with your creditors and get yourself out of debt.

Of course, as with any other type of arrangement an IVA has certain pro’s and con’s so it’s important to do a bit of research before entering into one since there can be certain implications involved.

What are the main reasons for entering into an IVA?

If you find yourself out of control with your finances, then it’s certainly advisable to seek an IVA companies independent advice at the soonest opportunity. Unfortunately, many are tempted to simply bury their heads in their sand in the hope it all goes away but, of course, that’s very rarely (if ever) the case.

IVA’s can be useful if you’ve got more than two debts adding up to more than £10,000 and you want a repayment plan to be managed by someone else. Most people find that one of the main benefits of being in an IVA is that, once it’s put into place, they no longer have to deal with numerous creditors and they can simply pay one monthly payment to an external company for the duration of the agreement. In some respects, they’re almost like a consolidation loan – that’s to say that all the debts are simply grouped together and repaid with one affordable monthly repayment.

Another key benefit of entering into an IVA is that once it’s been put into place then creditors can’t continue to contact you for money; nor can they ring, write or visit your home address. For some, this is a massive relief in itself since debts can very quickly lead to stress, depression and even suicide.

Are there any implications of entering into an IVA?

In short, the answer to this is “yes.” By entering into an IVA your credit rating will be affected and for some professions (such as the police or other law enforcement agencies) it could affect your employment – and this is something you’ll naturally want to avoid when it comes to rebuilding your financial future.

There are also other issues surrounding IVA’s – such as payments for support mortgage interest (or “SMI”). If you qualify for this then your SMI payments may well stop and you might have to repay any SMI you’ve received since 6^th April 2018. For this reason, the importance of obtaining independent financial advice can never be stressed enough. For some, an IVA is the perfect solution to rebuild their credit history going forward; whilst for others it can certainly have some very serious consequences.

Who should I contact about an IVA?

If you’re thinking about an IVA then there are lots of places who can help, including the Citizen’s Advice Bureau or a good financial advisor. The important thing is to shop around, do your homework and make sure you get the right solution for your own circumstances.