How does entering into an IVA affect me?

Last post: Feb 20, 2013

Before answering the question “ how does entering into an IVA affect me?” let’s look at what an Individual Voluntary Arrangement (IVA) is.

Before answering the question " how does entering into an IVA affect me?" let's look at what an Individual Voluntary Arrangement (IVA) is. If your debts are so high that you cannot meet the repayments, by entering into an IVA, means that you formally agree with your unsecured creditors a reduced level of monthly repayments that you can afford over a period of up to 5 years. They agree to waive any further interest and any balances of up to 70% that are outstanding at the end of the agreed period are written off. So, now that you know what an IVA is, let's answer the question " how does entering into an IVA affect me?" so that you are aware of the potential implications. There are some positive effects of an IVA on people. Before entering into one you were possibly stressed at having to deal with your creditors who will have written to you on numerous occasions and contacted you by phone. Once that IVA is in place, as long as you maintain the reduced level of monthly repayments, you will no longer be contacted in this way. Furthermore, you will pay the monies to your Insolvency Practitioner who will distribute the funds to your creditors. Assuming you have kept up your mortgage repayments, you should be able to retain your home thus avoiding having to sell, move into rented accommodation and struggle to get back on the housing ladder for years. Unfortunately, there are a number of negative aspects to entering into an IVA. For instance, a record of this fact is maintained on the Individual Insolvency Register and with the credit reference agencies for 6 years so this will have an adverse impact on your ability to obtain further credit for years to come. So, if you were planning to move home because your family have outgrown their existing property you may struggle to get a mortgage and if you do the interest rate will be higher than you would normally expect to pay. That new car you had your eye on may need to stay in the showroom window because you may struggle to get a car loan or, if you can get one, it will likely be at a much higher rate of interest. If you were looking to change your lounge suite because it is looking shabby after ten years of use then you may be turned down for hire purchase at the furniture shop because of the existence of the IVA. Sometimes an IVA can affect the terms of your employment. For instance, you would not be able to work as a financial adviser. If you were to receive any bonuses at work or inheritances they may need to be paid into your IVA rather than being spent on a holiday or to buy a new car. On an extremely personal basis, the stress caused by a couple struggling with the burden of debt can result in divorce and the break-up of a once happy family home. At Choice Loans we work with reputable and experience Debt management professionals as well as IVA practitioners. If you are considering entering an IVA and would like a no-obligaion chat with one of these experts then please either complete our Debt Management Enquiry form or call us on 01494 410125.