Having an IVA is an affordable way to get out of debt, but there are pros and cons to using this type of debt relief. It can help you clear debt faster and at a cheaper rate than bankruptcy, and it can help you rebuild your credit. However, you should seek free and impartial advice before taking the plunge.
An IVA is an agreement with your creditors to reduce your debt, while showing them that you have made the best possible effort to repay them. You can make your repayments on a monthly basis, based on your income and living expenses. If you miss a payment, it can affect your credit rating and make future borrowing more difficult. If you are considering an IVA, make sure you read the terms of your contract carefully. It is a good idea to seek advice from a licensed insolvency practitioner.
An IVA can also protect your assets. Creditors will no longer be able to force you to sell your home or your car, or add extra interest to your payments. It will also shield you from legal action. Creditors will not be able to contact you directly, or file a court application for payment default.
If you decide to use an IVA, it can help you keep your job. It can also help you avoid making your staff redundant. It will also allow you to pay back your debt without having to sell your home. The IVA will also allow you to write off a percentage of your debt, so that you do not need to repay the rest. This means that you will be able to continue trading while paying off your debt.
You may also be able to keep your home and car on finance. However, you will need to make reasonable payments to keep them on track. It is also likely that you will need to remortgage your home to free up equity for unsecured creditors. It is possible that the new rate of interest will be much higher than your original mortgage rate.
In some cases, you will be able to reduce your debt by up to 70%. This is a significant amount of money. However, it will only be enough to support a modest lifestyle for a short period of time. The IVA is also likely to leave a negative impression on your credit rating. It can also negatively affect your property ladder dream.
In order to take advantage of this, you need to be careful and plan well. You will need to keep track of your payments, and you may not be able to save as much money each month. You should also remember that this debt relief option is only available to unsecured debts. This means that it will only help you if you are struggling with debt from credit cards, personal loans, overdrafts and other unsecured sources.
An IVA is an effective debt solution, but it can be a tough decision to make. You may feel like you have no options left. However, with a little patience and help from a qualified insolvency practitioner, you can make the best possible choice.