11 January 2024
IVAs: What Are They and Are They Right For You?
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With the concerning increase of IVA promotion in a misleading and inappropriate way to local people, we have decided to share our advice regarding IVAs below. If you cannot afford your current repayments, please come to us directly; we can help with a repayment agreement, or inform you of respected and impartial debt advisors.
What is an IVA?
An Individual Voluntary Arrangement (IVA) is a legal agreement between an individual and creditors to repay debts over a fixed period. The debtor proposes a repayment plan through an insolvency practitioner, and if approved by the majority of creditors, they make regular payments during the agreed period. Once completed, any remaining covered debts are typically discharged, providing a structured alternative to bankruptcy with legal protection during the repayment process.
However, it's important to note that while it may sound appealing, an IVA can have long-term consequences on credit ratings and should be approached with careful consideration.
Here’s our tips on navigating IVAs:
Evaluate Promotional Claims
- Scrutinise advertisements to ensure they do not overemphasise benefits whilst downplaying drawbacks.
- Be cautious of the promotions that seem too good to be true.
Research Debt Solution Companies
- Verify the credibility of companies offering IVA services.
- Beware of the companies prioritising profit over client wellbeing.
Seek Financial Advice
- Contact us, and we can set up a repayment plan or point you in the direction of impartial and respected debt advisors.
- Recognise that IVAs are not a ‘one size fits all’ approach.
- Explore other debt management solutions.
Understand the Impact
- IVAs are seriously legally binding agreements with legal consequences if breached.
- Defaults will remain on your credit score for six years.
- IVAs are not a quick fix to write off debt.