What To Consider Before Getting an IVA

Dealing with large amounts should not have to be the case for anyone, but in case you do happen to fall into debt, it is important that you consider a lot of options that you could be entitled to. An IVA is a binded legal agreement between you and your creditors, in which you repay your debts over a set period. IVA’s are a great way to provide a sense of relief to those that are financially struggling but there are both pros and cons to this decision. It is crucial to find the right insolvency company to help you through this hard time. This is because you have to contact a solvency professional throughout this entire process, as they will help you by contacting your creditors, working out the amount of finances that you owe per month and help you in managing your repayments. Overall your solvency professional would start by holding back 75% of your total debts that you owe, allowing it to be much easier when it comes to paying them back. It is important that you as a customer are aware of what having an IVA means, the pros and cons, and how it can affect you in the future.

Pros to IVAs

An IVA offers you legal protection against creditors, therefore preventing them from trying to take legal action against you, or by contacting you asking for payments. This can really help you in gaining breathing room when dealing with your finances and debt. By splitting down your debts into manageable payments, it makes tackling your debts much more affordable. Due to the fact that it is calculated based on your personal income and expenses, it makes it much easier to manage your repayments throughout the month. It is also a great opportunity in avoiding bankruptcy, which can leave you with much more severe and long-lasting consequences on your credit rating and financial future.

Cons of IVAs

Whilst IVA is a great opportunity to help those out which are really struggling, there are also quite a few cons of choosing IVA as the way to help to sort out your debts. One of the main cons of using this method is the fact that it negatively affects your credit score. This means that it will be challenging to obtain credit during the IVA and for many years after that. Whilst you can borrow up to £500 during your IVA term, it is not advised as it could potentially risk breaching your terms, causing your IVA to be in failure. There is also a cost to pay for managing and setting up an IVA, which will be taken out of your monthly payments, which can prolong your repayment period. This fee would be decided by your solvency practitioner Since having an IVA is an agreement, you will need to adhere to a strict budget with your finances throughout the arrangement. Your IVA is also public record, meaning that your financial situation therefore becomes publicly accessible information. Overall failure to meet any of their terms will resort to the failure of your IVA, resulting in the possibility of bankruptcy as a consequence.

Overall getting an IVA can be good for those that need extra support from others whilst struggling to deal with their finances. There are many things to consider when tackling this problem but with the help of a professional solvency practitioner it can really help you to feel less stressed, and help you to gain more control over your finances.

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