If you are struggling with debt, an IVA, Individual Voluntary Arrangement, could be the right choice for you.
Though an IVA is a good option for many compared with declaring bankruptcy, it is important to remember that there are both pros and cons when it comes to taking out an IVA.
The pros of an IVA
There are many advantages to taking out an IVA to manage your debt.
An IVA allows you to pay back a percentage of your debts over a fixed period of time. Once the IVA period is over, the remaining debt is cleared.
The IVA is a legally binding agreement, so charges and interest can not be added to your debts once the IVA has been agreed, your creditors can not change their mind once you have entered into an IVA.
Your monthly payment is fixed and will not change unless your income drastically increases.
An IVA is a private agreement, so you can continue to practice at a professional level, open a regular bank account and have fewer credit restrictions than bankruptcy.
An IVA keeps your property safeguarded.
The cons of an IVA
There are disadvantages to choosing an IVA. If your debts are under £15,000 you might not be able to take out an IVA. Moreover, if you fail to keep up with your IVA payments you can still fall into bankruptcy.
Typical monthly IVA payments are around £200, and if you have equity in your home or an endowment policy that is linked to your mortgage, you might be required to release these funds.
IVA's generally operate over a longer term than bankruptcy, usually lasting for around five years.
For more information on bankruptcy and debt services, call Legal Advice Helpline on 0800 612 3042 to find out how we may be able to help.