Pros and Cons of an IVA

As with every financial agreement, you will have to consider all IVA pros and cons before you enter into one. Knowing everything that will come with entering into this agreement is important, which is why we always ensure that you know what you’re getting into. Making a list of the pros and cons of an IVA can help you to simplify the information you’ll be getting about this debt management solution, and will help you to make the right decision for your finances.

The pros of an IVA

There is a wide range of advantages to taking part in an IVA, as you will find that it is an easy way to resolve your debt issues and get you started on the path to a debt free life. Your pros can include:

  • You’ll be debt free after 5 years
  • You won’t receive any payment demands while in your IVA
  • Any interest or late payment charges will be frozen
  • Your debt will be managed into one monthly payment
  • Your credit rating will be repaired (usually around a year after your IVA has finished)
  • You will have protection for your home and certain assets
  • You’ll be protected from any court action concerning your debts
  • Your IVA is flexible and will be reviewed annually to see what payment plan suits you best
  • Your creditors will see that you’re willing to pay back your debts

All of this will prove that you’re willing to make a positive change to your final situation as well as to your overall lookout on life. With no more debt-chasing or worrying about the outcome on your home you’ll be able to fit your payments into one lump sum without struggling to organise your income into multiple monthly payments.

Cons of an IVA

There are always disadvantages to consider in every debt resolution scheme, which is why it’s important to understand both sides of the solution before you sign up to anything. IVA’s are no different, and it can be vital to know what the cons of an IVA can be so that you don’t make the wrong decision regarding your finances. Cons of an IVA could include:

  • A possible release of your home equity
  • There’ll be no unsecured borrowing during the time of the arrangement
  • You’ll be stuck to a specific payment regime for 5 years
  • Your credit rating will be damaged for the five years you are in the arrangement, plus around a year after (but it would also be damaged if you had declared bankruptcy)
  • An IVA lasts longer than bankruptcy – bankruptcy usually lasts about 1 year
  • You will have to pay back more than you would in bankruptcy
  • You have to include all of your creditors
  • You’ll be able to be found on the insolvency register
  • Some jobs don’t allow their employees to be bankrupt or in an IVA

Considering these disadvantages is important when you are looking into an IVA, but knowing that at the end of the five years that you are involved in your IVA your remaining debts will be wiped and you will be able to start fresh, it seems worth avoiding bankruptcy and paying off your creditors however you can.

Considered the IVA Pros and Cons?

Once you have had the chance to weigh up IVA pros and cons, you might find yourself considering signing up to your own IVA to help manage your debts. By simply filling out your details you’ll be put in touch with one of our agents here at Consumer Rights who’ll be able to help you discover whether you’re eligible for an IVA, and how this agreement can help your finances. Filling out our form today will help you to start your journey to financial freedom quickly, so why wait?

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