IVA or Individual Voluntary Agreement is a great solution to clear unsecured debts, wherein a registered Insolvency expert splits up your monthly savings between multiple creditors.
Get rid of Debt
Undoubtedly, the best thing about IVA is that you will get rid of your debt! You will no more lose sleep over your unpaid debt and worry about the huge sum hanging over your head as IVA lets you pay whatever you can with minimum discomfort.
Pay what you can
You will only be required to pay what you can afford, to clear your debts. Your monthly earnings and expenditure will be taken into consideration before settling for an amount with your creditors.
An IVA will last for about 5 years which gives you ample time to settle your debts and any amount post these 5 years will be legally written off. So, whatever you may be able to pay within these 5 years will be all and your creditors can’t demand any further payment from you.
Saves your Assets
If you aren’t able to clear your debts, your creditors will come after your assets that may include your house. IVA thus, becomes a great solution for your debt management, as it helps you from losing the roof over your head.
Prevents Legal Action
Once an IVA comes into place, you and your creditors are bound by a formal agreement and they can no longer take any legal action towards you and so, you save yourself from all the hassles of litigation.
Protects against interest
Once an IVA comes into place, your creditors cannot charge you anymore interest, other than the amount that you have mutually settled for.
The most crucial con of IVA is that it will impact your credit rating. From the moment your IVA is accepted, your credit rating will hit a low which might affect your chances of getting credit in future.
Now that you have formally agreed to repay your debt to the best of your abilities, you will be required to manage your earnings in a way that you spend less and save more so that your monthly savings can be contributed towards your IVA debt pay-off.
Once you opt for IVA solution, there is no turning back. If you go for cancellation your creditors may opt for legal action or Bankruptcy which may dissolve all of your assets.
Apart from your monthly IVA settlement amount, you will also have to pay a sum of fee to your Insolvency Practitioner who will help you manage your expenses.
But no matter what the cons are, an IVA is the best way to get out of your debt related problems, if you have a steady source of income and willingness to settle your debts.