Disadvantage IVA

What Is The Disadvantage Of An IVA

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Disadvantages Of An IVA

You may well have read glowing reports of the many positive aspects of using an IVA to deal with your debt problems, but companies eager to set up an IVA for you can sometimes forget to tell you there can also be the odd disadvantage to an IVA too.

An IVA is a formal and legally binding agreement, so it is important to enter into it with your eyes wide open and fully aware of all the issues and implications. It is true that for many people an IVA can provide an excellent solution to their problems and set them on a course for becoming debt free again, but they are not right for every debt situation.

Most sources of information on IVAs that you will find on the web are likely to be part of marketing material ultimately designed to sell you their product, so you need to exercise a degree of caution. Such sources have a vested interest in highlighting the benefits, which often leads to skipping over some of the possible disadvantages of IVAs.

You can find out more about how an IVA works and what the benefits are on the main IVA page of this website. The page you are looking at now is just intended to list all the aspects of setting up an IVA that might in some circumstances be seen as a disadvantage. Please read the following in conjunction with information on the benefits of IVAs to be sure that you have a full and rounded picture of this debt solution.

Disadvantages Of An IVA

IVAs cost money. They are set up by Insolvency Practitioners, who need to be paid for their services. Their fees are usually built into the monthly payments you will make. It is worth applying to several different IVA Specialists to ensure you can compare proposals and costs. The costs, however, are still less than for bankruptcy.

You need to have debts of at least £15,000 to qualify for an IVA.

Your debts need to be to more than one creditor, usually two or three at least.

You cannot include a mortgage in your IVA, or any other type of secured loan. The same applies to council tax, student loans, court fines, child support or hire purchase agreements on goods that you are still using.

At least 75% of your creditors need to agree to the setting up of an IVA for it to happen. This percentage is in relation to the total value of the debt rather than the number of creditors you owe money to. While this ability to force the odd reluctant creditor to join in is normally considered to be a good thing, the disadvantage can be that if you have one creditor who is owed at least 25% of your total debt, their vote against the IVA can prevent it from being set up.

The IVA requires that you make fixed monthly payments for a set period, so you have to have a steady source of income to be able to afford this.

An IVA will usually last for five years. This is longer than for bankruptcy, though some of the other consequences are less drastic or long lasting than with bankruptcy.

While one of the advantages of an IVA for homeowners is that you do not automatically lose control of your home as you would with bankruptcy, you need to be aware that if you have equity in your house you may be required under the IVA to release it to go towards your debts. If this does happen it would tend to be at the end of your IVA. It is not automatic and depends what the Insolvency Practitioner can agree with creditors.

If you have enough income and assets, you can still end up paying back all your debts in full under an IVA. IVAs are designed for people in very serious situations, facing possible bankruptcy, and these are the people who benefit most from the process. If you cannot possibly repay all your debts, an IVA will allow you to write off a large part of them. If you do end up repaying your debts in full, then it is likely that you should not have been offered an IVA in the first place. This situation can arise when people are advised by an over eager debt company to set up an IVA when an alternative debt solution might actually have been a better option. This is why choosing the right IVA provider is so important.

An IVA is a formal and quite rigid agreement, so it is very important to keep up with the repayments in all but the most unusual of circumstances. If your circumstances are likely to change, or you need more flexibility, you may be better with an informal agreement such as a Debt Management Plan.

If your circumstances change for the better, or you benefit from a financial windfall, you will be expected to use it to pay your creditors. If you work overtime or gain additional money from your employment, it is normally required to put half of the extra that you earn towards your debts.

While you are protected from being contacted by your creditors during the IVA, failure to keep up with the repayments can still lead to your creditors making you bankrupt. If this happens the costs of your IVA are added onto your debts.

Another disadvantage is that you will be unable to get additional credit or borrow money during the term of your IVA.

Your IVA will be recorded in a Public Register, which will almost certainly affect your credit rating, even after the IVA has ended. While this is certainly a disadvantage, the fact that it is a private agreement means that it will not be published in the press as would happen with bankruptcy.

Disadvantage Of An IVA – Conclusions

Hopefully the above information will give you the full picture that may be missing from some of the glossy sales pitches you see on other websites interested in setting up an IVA for you. IVAs are the perfect solution for some people, but not everyone.

If you could afford to keep up with payments on your debts if you really tried, an IVA is probably not for you. If you just want a way to simplify and reduce your payments, look at Debt Management Plans instead. Getting honest advice is crucial, so make sure you use reputable companies to help you, and apply to a few different ones to compare what they say.

You can find a list of well established and reputable IVA providers on the main IVA page of this website. Applying online is quick and simple and does not commit you to anything. Complete the forms and they will contact you to go through your situation in more detail.

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The Pros and Cons of IVAs

What Is The Disadvantage Of An IVA

See Also: List Of Recommended IVA Providers

Or Complete Our Online IVA Application Form On This Page Now

Please Note: IVAs Are Only Available In The UK
US Citizens Please See The Debt Settlement Page

Disadvantages Of An IVA

Disadvantages Of An IVA

Disadvantage Of An IVA – Conclusions

Apply For UK Debt Help Now

Disadvantage IVA

The Pros and Cons of IVAs

What Is The Disadvantage Of An IVA

See Also: List Of Recommended IVA Providers

Or Complete Our Online IVA Application Form On This Page Now

Please Note: IVAs Are Only Available In The UKUS Citizens Please See The Debt Settlement Page

Disadvantages Of An IVA

Disadvantages Of An IVA

Disadvantage Of An IVA – Conclusions

Apply For UK Debt Help Now

Please Note: IVAs Are Only Available In The UK
US Citizens Please See The Debt Settlement Page