Advantages of an IVA

Stability and Protection

While there are a number of solutions available to those with large amounts of debt, An Individual Voluntary Agreement (IVA) has a number of advantages. The most common problem facing debtors is the potential for the creditor to constantly barrage the individual with demands and in the worst case begin legal proceedings by sending a County Court Summons (CCJ). As an IVA is a legally binding agreement between the creditors and the debtor, they can no longer chase for outstanding debt (provided the IVA repayments are being met). Nor will a creditor be able to change the monthly repayment amount agreed as it is legally binding on both parties. In fact, unlike other solutions, such as debt management plans, the IVA is managed and supervised by an Insolvency Practitioner (IP), so the debtor needs not have any contact with their creditors at all. All in all, this relieves the pressure often felt by those in debt, as well as giving a certain degree of protection against the creditors.

Affordable/Sustainable

Furthermore, as the repayments made under an IVA are based on what the individual can reasonably afford, there is no danger of going further into debt (indeed an individual will not be able to get any further credit during the period of the IVA anyway). As a result a debtor will be in a position to plan and budget for their day to day expenditure. And as an IVA is for a fixed term, usually 5 years, there will always be a light at the end of the tunnel. Once complete, the creditors are obliged to write off any outstanding amounts, unlike other solutions where there is not necessarily any fixed time frames, nor any guarantees the debt will be cleared by the end of it.

Protecting your home

A huge advantage for homeowners is that their homes are not put at risk under the terms of an IVA. In fact, any mortgage repayments, or rent, as well as necessary bills and payments are taken into consideration during the planning sessions with the Insolvency Practitioner. Therefore an individual in an IVA will be secure knowing that they will not lose their house, and still be able to pay all the bills!

Criteria and cost

In order to declare bankruptcy, there are a few criteria that must be met. The individual must be a resident of the UK (or have a UK passport and a UK postal address). The majority of debt owed must have been taken whilst living in the UK. The individual must be insolvent (ie the total value of the debt outweighs the value of the individuals assets). The individual must be able to afford the associated costs. The actual cost to declare bankruptcy is over £700 made up of a court fee, and administration fees.

Avoiding Bankruptcy

Finally, many of those in debt are terrified of having to declare themselves bankrupt, if not just because of the stigma that can be associated with it. Not only does an IVA not have that stigma associated with it, but where an individual declares bankruptcy this is often published in the local newspaper which many may wish to avoid. An IVA is a private arrangement, not even employers are informed. The IVA will however be recorded on the individuals credit file and the insolvency register.