An IVA is an excellent solution for those who fit the criteria. Below are the pros and cons of IVAs.
Pros
- Creditors who vote against your proposal are still bound by it
- Creditors whose lending is unsecured can’t take any further action.
- Interest is usually frozen as long as you keep up your payments
- Our insolvency practitioner will prepare your proposal, including agreeing the level of your household and personal spending based on guideline acceptable to creditors.
- You make only a single payment each month or quarter. Our insolvency practitioner is responsible for administering and distributing your payments.
- The terms of an IVA will usually enable you or your spouse or partner or a relative to make arrangements to buy your share of the net worth of your home or to make extra payments,rather than the home having to be sold. This may be done through a remortgage or a loan.(Net worth means its value after any debts secured on it have been paid.)
- On completion of the IVA, the balance of what you owe your creditors is written off.
- You may be able to continue running any business you have.
Cons
- Your IVA is entered on a public register
- If there is some equity (value) in your home after taking account of the mortgage(s) on it, you will probably have to pay for your share, usually in the fifth year of your IVA, by remortgaging the property. If you can’t get a remortgage, you may continue making month or quarterly payments from your income for up to another year.
- If your circumstances change, and your practitioner can’t get creditors to accept amended terms, the IVA is likely to fail. You will then still owe your creditors the full amount of what you owed them at the start, less whatever has been paid to them under your IVA
- If your IVA fails, you may be made bankrupt.
As you can see the benefits of an IVA in the correct circumstances outweigh the cons, however it is a serious commitment and should not be entered into lightly. For more help and advice on how an IVA could help you contact us on 0800 121 48 63 or email info@refreshdebt.co.uk
