Like any solution, opting for an IVA does have its disadvantages. You will need
to weigh these against the cons before making a decision about whether this is the
right solution for you.
Among the disadvantages are:
An IVA is a formal agreement with your creditors. If
you do not make the repayments, then the IVA will fail and your creditors will be
able to pursue legal action, such as bankruptcy.
The amount you will be expected to pay back is rigid.
There is no flexibility in changing the amount if you find yourself unable to make
the repayments at any time. You must be certain that you can afford to repay the
same amount each month.
Your entire finances will be scrutinised by your creditors
each year. They will no longer be a private matter for your eyes only but you must
submit them for annual reviews so your creditors can ensure that your circumstances
have not changed.
You may have to sell your house or other assets to release
equity and pay back your creditors as part of the agreement.
During the time you have the IVA, you will not be able
to apply for any other credit agreements. It will also affect your credit rating
for six years.
The costs of an IVA can be high and you may be expected
to pay these in advance.
If your IVA proposal is refused, you will have to wait
12 months before you can reapply.
A Insolvency Practitioner will be able to go through the various reasons for and
against the IVA with you. They can look at your income and expenditures and help
you make the right decision.