A Guide to Some of the Advantages of IVAs

It can seem complex to understand some of the legal ways to resolve unmanageable debts, especially when you first begin. In this article, we quickly and simply explain some of the advantages of an Individual Voluntary Arrangement (IVA). We also provide generalised debt advice through pointing out some considerations related to this option that simply may not have struck you before.

IVAs Are Legally Recognised Solutions
Once formally agreed, creditors are subject to the terms of the IVA. You will have a clear understanding of how long it is going to take to become debt free and how that can happen.

Creditors Cannot Continue To Demand Payments By Letter Or Telephone
Once agreed, that type of letter and/ or telephone call must stop by law.

New Interest And Charges Don't Apply
The law says that creditors must cease adding new interest or charges once the IVA is operable.

Creditors Cannot Start New Court Action
The law says that once agreed, providing you keep to the terms and conditions, your creditors are not able to start new court action against you for the relevant debts.

A Road To Restarting Credit
If you successfully keep to the terms and conditions, when the IVA finishes, you can begin rebuilding your credit score.

A More Private Option
IVAs are not announced in local newspapers. You may appear on the internet on the Insolvency Register, but this is not an 'everyday' publication such as a local paper.

Avoids Certain Problems For Your Professional Status
Your work status is generally unaffected and as mentioned earlier, the whole nature of the arrangement is somewhat more private. For some qualified professionals this can help avoid the stigma that can sometimes accompany debt problems.

You may also want to consider the following points:

Addressing All Your Debts
It is true you have to include all your debts when applying for an IVA (whereas this is not always the case in Debt Management Plans). This does mean however that all debts would be managed with one single legal solution, providing you stick to the terms and conditions.

Successful Completion
The most realistic debt advice here is that this relies on you adhering to the terms and conditions, including meeting monthly payments throughout the agreement (typically lasting 5 years at least). In some cases, you may be able to take 'repayment holidays' or miss payments in seriously adverse circumstances, but this will of course extend the life of the IVA if arranged. Nonetheless, this may still be a preferable option for you to be able to continue with and then compete the IVA.

Some Considerations For Credit
Whilst an IVA is legally operable, 'plastic' credit is normally not an option but you can these days use pre-paid alternatives. Pre-pay cards allow you to pay money onto a card and then enjoy the convenience of paying for goods or services, just as you would previously have done using your credit or store cards. The vital difference is applicably pre-pay cards should not allow you to create further debt by using them, as they rely on funds you have 'loaded onto them' before spending.