The Advantages and Disadvantages of an IVA – Citizen Debt Helpadmin
Advantages and Disadvantages of an IVA: If you are struggling hard to repay your debts, often the team of govt debt help advises you to go for IVA UK (Individual Voluntary Arrangement). IVA is often considered as the best debt solution to cope up with certain situations. IVA debt involves writing off the debts and reducing the amount of debt by getting into a legally binding agreement.
IVA UK provides a way out to repay the debts at an affordable rate for a certain period. It is an agreement between the debtors and the creditors, where the latter allows the former to repay the debts at a monthly affordable rate within a time frame of around 5-6 years. IVA debts have the provision of writing off the excess of unsecured debts remaining at the end of the tenure of the repayment.
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The Main Advantages and Disadvantages of an IVA UK
Although IVA permits writing off the debts, yet it also has a significant impact on your credit ratings. Whether you avail any sort of govt debt help or other free debt help services from financial counselling agencies, you will be liable for a regular monthly payment.
Whenever you approach any kind of citizen advice debt help, they explain you the details of IVA and whether it will be a good choice to cope up with your current financial situation. But before you even plan to consider opting for IVA UK, you need to know the advantages and the disadvantages of this debt solution. Here are some of the pros and cons of IVA:
The Main Advantages of IVA
1. Debts are written off
Usually, the tenure of repayment of the debt under an IVA UK varies between 5-years. After the completion of this period, if there are several unsecured debts left to be repaid, that is usually written off. Based on the amount of monthly repayment, a certain percentage of the debt is written off and thus, the debtor usually has to pay less.
2. One affordable monthly payment
If you approach the financial advisors of the citizens debt help UK, they will design a repayment plan for your debt. The agreement will ensure that both your creditors and you agree to a certain affordable amount for monthly repayment. The amount of monthly repayment usually depends on the monthly income but it can be as low as £70 as well.
3. No direct interaction with a creditor
IVA UK prohibits the creditor from directly contacting the debtors. Legal actions can be imposed on the creditors if they try to violate this norm. Even if there are a few creditors, who don’t want to agree to your proposed amount of monthly repayment, they are still bound to accept it.
4. No extra charges or interest
All debt-interests are frozen once you get under the IVA. All sorts of charges related to the late payment, overdrawn, or overspending charges are removed while someone is repaying through IVA debt.
5. Zero set up cost involved
Whether you sign up for an IVA with the assistance of any sort govt debt help or you avail any kind of free debt help, there is no setup cost involved for planning repayment through IVA.
6. No assets or property impacted
Whether it is your car or house or other forms of assets or property, IVA UK has zero impact on any of these. Under extreme circumstances, you may require mortgaging your property in case it has a lot of equity. But IVA doesn’t demand to sell off any of these.
7. No effect on career
Unlike many other debt solutions, getting into IVA UK has no impact on your career. No recruiter or employer will interfere if your debt repayment process is carried on through IVA. Even, it allows you to continue flawlessly if you own a business.
8. Complete guidance from an insolvency practitioner
The insolvency practitioners will guide you thoroughly to get help with debt through IVA. Be it writing the proposal or convincing the creditors to agree to the amount of monthly repayment, they will help throughout the procedure.
The Main Disadvantages of IVA
1. Credit rating affected
If you sign up in the IVA register, the details of that will be available on your credit files for the next 5 years and even after a year of completion of IVA. During this period, you may be refused to get further creditors from any other creditors.
2. Restricted living expenses
While the financial advisor of the citizen debt help will do the budget of your repayment plan, they will have to curtail on your daily expenses to afford all within your salary. Thus, you have to cut down a lot on your other living expenses.
3. Certain eligibility criteria fixed
There are certain eligibility criteria for opting for IVA UK as a mode of debt repayment. The criteria include having a fixed source of income and owing more than £5000 of unsecured debt to 2 or more creditors.
4. Availability of details
Since IVA is a form of insolvency, your details related to IVA will get recorded on the IVA register, an insolvency register. Thus, people will have access to these details if they search the register.
5. Consistent monthly payment
Even if there are extreme circumstances, then also a debtor who opted for IVA has to make the monthly payment at any cost. If anyone fails to make the payment even once, the whole process of IVA debt will be discontinued.
6. May get into bankruptcy
Failing to meet the clauses mentioned in the IVA, a creditor has the advantage to take legal actions against you. Even if any financial advisor of the govt debt help team is coordinating, then also the creditor may get you into bankruptcy under such situation.