Thinking of debt settlement? Consider IVAs!

The only undeniably pleasant part about debt is when you get the cash in hand. The rest of it, repayment, you have to acquiescently live with it with the due care of a diligent borrower. Yet if repayment grows problematic, then you have to handle it together with your creditors and it is best that you have debt settlement variants of your own before creditors and you sit on the table of negotiations. One option is worth considering, if only because it can clear up to 70% of your dues. Open to all residents of England, Wales and Northern Ireland, the Individual Voluntary Arrangement (IVA) is an agreement between all your creditors at once and you which binds you to pay monthly instalments over a specified period of time (usually five years). Yet an IVA can only be started if at least 75% of your creditors are willing to sign the agreement.

6 years on the credit file

No matter how good it seems to pay half of what you are supposed to, IVAs might prove troublesome on a number of accounts. First, be prepared to be "blacklisted" for at least 6 years. Any potential lender inspecting your credit history will see your IVA and this will likely dissuade them from extending you money. The good news is that an IVA is deleted once it expires.

Second, if you fail to duly service your loan under the IVA, your creditors will have the right to seek alternative redress, including by filing for bankruptcy. Third, although the IVA sees you pay loan instalments from your disposable income, should you fail to scoop the necessary amount in that way, you will be strongly urged to sell any valuables or else face bankruptcy.

Many banks will close their accounts with you but it all depends on each bank's policy so you may be able to have only a basic bank account. If you have no out standing amounts with your bank, they will only formally be informed of your IVA.

Eligibility check

There are several requirements which you must meet to guarantee you are eligible for an IVA. You must have defaulted on any of your loans. Your loan total has to be at least £10k and you must have at least 2 creditors. Besides, you need to ensure your creditors that they will be better off signing the IVA than seeing you bankrupt. You also need to be very honest in reporting on your assets to win creditors' trust.

The IVA is an alternative to filing  for bankruptcy and it allows you to make monthly payments to clear your debts. It's an agreement between your creditors and you. Should you fail to make payments on time, then you will have no other choice but to file for bankruptcy. 

Providers

Further details will be made available to you on specialised sites such as DebtFree. Experts will introduce you to the various types of IVAs and will help you compare it them with the other loan repayment schemes.

At Debt Advisory Line, you get award-winning advice, in keeping with the confidentiality this sensitive matter requires. With Trapped.co.uk, you can check the main options, the main requirements, your eligibility so that you do not start at ground zero with the experts on the line.

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The information on this page is designed to help you understand more and make more informed choices. We do not receive any commissions, instead we are funded from companies that we advertise on our website.