Should You Apply For IVA Relief?
Getting into debt may feel like the end of the world as it can be so hard to get out of it. In a lot of cases, bankruptcy is an option for people in financial trouble. However, this has serious consequences and could make things worse if you don’t have a plan or try to do too much at once.
Nonetheless, there are options out there to help you if you find yourself in a situation such as this. An individual voluntary arrangement (or IVA) is a good alternative that helps you pay back what you owe over time without going bankrupt. You can keep some of your possessions and assets whilst also avoiding bankruptcy, and it’s usually less expensive and risky. It also means your credit rating won’t be affected as badly because there are no bankruptcy restrictions on how soon after an IVA you can apply for credit again. You'll still need to stick with your payments though, so here's some advice.
Advice when considering an IVA
If you're struggling financially and want help getting back on track then it is highly recommended that before you make any decisions, you speak with a financial advisor who will advise which routes are best for you. They can suggest whether or not an IVA might work for you and guide you through the process from start to finish.
If it is suggested that an IVA is a good choice for you, then you will want to find out all there is to know about the procedures and regulations about this course of action. It can be a good option for those who need a debt solution. If your finances are not in an ideal situation, an IVA can help you get out of debt and can be more beneficial than a bankruptcy depending upon your circumstances.
While an individual voluntary arrangement is typically set up by a qualified person, there are many risks associated with this type of financial plan. The expense can be high for those who end up paying back more than what they actually owe due not only on lawyer or accountant fees but also because these professionals will generally take interest. This makes them less attractive and so you will want to figure out whether, after you apply for IVA, the long term reality of this situation will work out best for you.
What you should bear in mind with an IVA
To reiterate, an IVA is a formal agreement between you and your creditors to pay back your debts over time. This means that everyone involved must stick to it and its terms and conditions. It can be flexible but also very expensive because you will have to pay for legal fees as well as other things like credit reports while in an IVA. There are risks too if you don't make payments on time or decide not to continue with the plan after all.
An IVA involves paying back your debts and repaying them over a period of time. If your creditors do not accept your IVA proposal or do not receive payments on time, then they will be able to pursue you for the debts you owe them.
If your IVA is approved, you will have to pay your creditors periodic payments from you. This can be in weekly, monthly, or annual payments. But you need to make sure that you make the payments on time as agreed. This payback scheme can help to rebuild your credit profile, which is a great help. It is best to start the process as soon as possible, as lenders pay more attention to your recent financial history. In addition, the IVA will not affect your current financial situation and will be removed from your credit report after six years.
If you receive a windfall during your IVA, for example, an inheritance, this will usually be passed on straight to the creditors. Although this may sound like a pain, it can be a blessing in disguise as it saves you from spending it on other things and instead, ensures that you are putting it towards getting out of debt and being stress-free.
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