If you are trying to seek debt help via an IVA then there are both advantages and disadvantages to it. Here we explore some of the pros and cons of this debt consolidation alternative.
Advantages of IVA
Some of the advantages of entering into an IVA debt help arrangement is that you do not have to face the kind of stigma associated with Bankruptcy. You can continue being in business to get your source of income. You are also allowed to choose which assets you would allow your creditors to cash in on towards the end of the agreement, should the payment not suffice. Compared to bankruptcy, where administrative expenses are high, in an IVA debt help arrangement the costs are lesser. Just as in bankruptcy, the debtor is open to tax relief as well. If more than 75% of creditors approve the IVA debt help agreement then the remaining creditors are also bound by the terms. Creditors also have to agree that the final payment will be less than what was originally taken by the debtor. Thus, an IVA debt help arrangement comes with fewer restrictions as compared to a bankruptcy measure.
Disadvantages of IVA
IVA debt help can be sought only if your debts are unsecured and above £15,000. You need the acceptance and approval of at least 75% of the creditors for the IVA to come into force. The creditors can force you to release equity in your home or home other assets such as your car. This will only apply in situations where the creditors owe much more than if bankruptcy had occurred. If the IVA debt help arrangement fails then you might still face bankruptcy. Since the IVA cases are registered with the DTI they can hamper your credit file ratings. Thus, future credit applications can also be hampered. Although, it is considered that when the IVA programme is finished, all debts are deemed ‘satisfied’ by your creditors.
How do I apply for an IVA?
You can apply for an IVA with the UK Debt Advisor. Give us a call on 0800 043 2027 or fill out the free call back form below;
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