This is a collaborative post: An Individual Voluntary Arrangement, or an IVA, is a debt solution in which you agree to repay what you can afford of your debt each month over a set period of time, usually five years.
An Individual Voluntary Arrangement debt solution is only available to residents of England, Wales, and Northern Ireland. The Scottish equivalent of an IVA is a Protected Trust Deed. A Protected Trust Deed shares many benefits as an IVA, but there are some important differences that you should be aware of before entering into one.
IVAs, and other similar arrangements, can enable a representative to put forth a proposal to your creditors on your behalf which, if accepted, means your creditors can no longer take further action against you. Additionally, an IVA can help protect and retain assets such as your home or car and, once the solution is complete, enable you to be debt-free.
There are many key benefits to using an IVA as a debt solution.
First and foremost, it can help relieve the stress and worry of debt by putting a plan in place to repay what you owe. It can also help you become debt free within a realistic timeframe, and may allow you to keep your home if you are struggling to meet mortgage repayments. If you are considering an IVA as a way to deal with your debts, it is important to seek professional IVA advice to ensure that it is the right solution for your individual circumstances.
Another benefit of an IVA is that it can help protect your assets which ensures that you are able to keep them even as you work to become debt-free. For example, if you have equity in your home, an IVA could help you keep your home by preventing your creditors from forcing a sale.
It is important to remember that some people might think that everything they own can be counted as an asset, this is not necessarily the case. In fact, there are a number of items which are not considered assets and which you retain possession of even if you go through IVA. These include computers, phones, clothes, furniture, televisions, sofas and other household items
Finally, once you have completed your IVA, any remaining unsecured debt that you owed when you started your IVA is written off. This means that you are free from your unsecured debts and no longer have to make any monthly payments towards them. You will also be released from any interest or charges that had been accruing on your unsecured debt. After your IVA has been completed, you will need to continue to make any agreed monthly payments towards your secured debts, such as your mortgage. Keep in mind you will also need to keep up with any other payments that were not included in your IVA, such as council tax and utility bills.
It is important to remember that although an IVA can help you get your finances back on track as you work towards becoming debt free, there are some downsides.
One such downside is that it will be noted on your credit file, and the default will stay on your file for six years from the date it is applied. This means that if you want to take out any new credit during this time, you may find it more difficult to do so. If you’re considering an IVA, it’s important to get advice on the advantages and disadvantages from a qualified insolvency practitioner to make sure it’s the right solution for you.
An IVA can be a great debt solution for those who are struggling to repay their debts in a timely manner. It offers a number of key benefits, including the ability to repay your debt over a set period of time, protection of your assets, and the write-off of any remaining unsecured debt once the IVA is completed. If you are considering an IVA, it is important to seek professional advice to ensure that it is the right solution for your individual circumstances.