An IVA, or Insolvency Victims’ Association, is a legal agreement that is a great option for anyone who has trouble paying their debts. It will allow you to keep your home and keep your creditors from hounding you. However, there are some drawbacks to this scheme and you should be very careful before entering into it.
Depending on your circumstances, you might be asked to make some contributions to the IVA or to remortgage your house. Similarly, you might be required to make the most of your finances or to trade in your car for a cheaper model. If you’re considering signing up to an IVA, be sure to speak to a free debt adviser.
While an IVA can save you from bankruptcy, it can also have other pitfalls. For example, your credit score may be damaged for up to six years, so it’s important to get help before you enter into it. You can also lose your house if you cannot meet the requirements of the IVA. Even the best of these schemes can be unaffordable for many people.
The IVA is the apex of a lengthy process that involves the assistance of an insolvency practitioner (IP). IPs are usually accountants who have extensive knowledge of financial matters. They will help you work out a plan to repay your debts and keep you out of bankruptcy. A good IP will also be able to provide advice and suggestions on how to improve your finances, including ways to boost your credit rating.
Typically, an IVA will reduce your debt by at least half, with the most successful cases resulting in a write off of up to sixty percent. This may sound like a lot, but it’s only a small part of your total debt. As long as you can keep up with the monthly payments, you should be able to keep your home.
To start, you will need to contact a debt advice charity. Most will be able to offer you a free consultation. You’ll need to know how much money you owe, how much income you earn and how much you can afford to spend on your debts. Your advisor will then work out a budget for you. These may include a cash injection that you can use to make additional contributions to your creditors.
The other big benefit of an IVA is that it stops your creditors from taking any further action against you. This includes not charging you interest on your outstanding balances. Moreover, the process is highly regulated to ensure that everyone adheres to the rules. Some IPs will charge a fee for setting up a proposal, but you can usually find a free one.
Another reason an IVA is better than bankruptcy is that it can protect your assets. Creditors are legally obliged to keep a list of your creditors, and this information is publicly available for at least six years. Additionally, an IP will inform your creditors about your IVA.