What are the advantages of an IVA?
If you’re struggling to repay a significant amount of unsecured debt, an IVA – or Individual Voluntary Arrangement – could be the ideal solution.
An IVA is a form of insolvency that is sometimes considered a preferable alternative to bankruptcy. It’s a legally binding agreement between you and your unsecured lenders, in which you commit to repay as much as you can towards your debts over an agreed period: normally 5 years.
If your IVA is accepted, it’ll allow you to make one affordable monthly payment tailored to your personal circumstances – and could mean you avoid the financial consequences and ‘stigma’ often attached to declaring yourself bankrupt.
Furthermore, entering into an IVA could mean that:
- The remainder of your unsecured debt is written off on successful completion
- You are protected from any further action from your unsecured lenders
- You know when you’ll be debt-free
However, an IVA wouldn’t be appropriate if you can’t commit to regular payments, and if you are a homeowner it’s very likely you’ll have to release some of the equity in your home.
An IVA will also remain on your credit file for a year after its completion (if it was a typical 5-year IVA) which can affect the cost and availability of credit in that time.
