What many people don’t understand is that bad debt often happens to good people, and most of the time it is out of their control. If you are struggling to manage your monthly debt repayments, then you may need some support in the form of a debt solution. Whilst there are a number of debt solutions to choose from, if protection from your creditors is a priority for you, then an Individual Voluntary Arrangement (IVA) may be a good option for you.
Before you make a decision about which debt solution is best for you, you should always consult with a debt professional. Companies like Debt Movement are here to give you the help and guidance you need to understand the options available, so you can make an informed decision.
So, let’s take a look at how an IVA can help you and what protection it will provide.
What is an IVA and what protection does it offer me?
An IVA is a legally binding agreement between an individual and their creditors. It is a solution that allows a person to only repay a percentage of their unsecured debt to their creditors in affordable monthly payments, usually over a fixed term of five or six years. Once your IVA is approved by your creditors, interest and charges will be frozen and no further action can be taken by the creditors in relation to your debt. Once an IVA is completed, you will receive a certificate of completion, and the remaining unsecured debt is written off.
One of the great benefits of an IVA is that it prevents legal action, including County Court Judgements (CCJs) and Charging Orders. Once your IVA is approved, your assets are legally protected because your creditors cannot take further action against you.
What are the pros and cons of an IVA?
Pros
- All your unsecured creditors will be dealt with in one affordable monthly payment.
- An IVA will stop further interest and charges from being added to your debt.
- The number of monthly repayments is fixed. Usually at 60 or 72 payments.
- The remainder of your unsecured debt will be written off at the end of your IVA.
- An IVA is a legally binding contract, and all creditors must adhere to its terms. It awards you legal protection against any further creditor action.
Cons
- The default registered at the start of your IVA will stay on your credit file for six years after approval, so your credit rating will be affected.
- If you receive a windfall during the term, you may be required to pay it into the IVA.
- You cannot borrow any further credit and there may be spending restrictions.
- You may be required to release equity from your property.
- If your IVA fails, creditors can request the Supervisor to petition for your bankruptcy.
- Your details will be placed on the Individual Insolvency Register, a public record.
We know that debt can be scary, but with the right help, you can start your journey to financial freedom so you can live your best life again. Reach out the non-judgemental team a Debt Movement for imparcial debt guidance and solutions.
