If you are seriously considering an IVA then you should take a look at both the positive and negative sides of this debt solution
. Often, people choose an IVA as an alternative to bankruptcy. A brief summary of the advantages and disadvantages of this agreement and how it compares to a declaration of bankruptcy can be read below.
An IVA is an agreement with all of your creditors that you will pay off your debt, via monthly payments, within a reasonable space of time. This period lasts about five years, which is two years extra further than a bankruptcy would last. With an IVA no further communication from your creditors is legally allowed. This is a great relief for all debtors. An IVA also legally states that you cannot be given any further interest charges or late payment fees by your creditors.
Just like with bankruptcy an IVA will effect your credit rating. It will not be as damaged as if you went bankrupt but you will still not be able to gain credit for the duration of your agreement. It may be quite difficult to get credit for a period following your IVA also.
When you apply for bankruptcy, depending on your situation, you may not have to pay back any of your debts. With an IVA you will definitely have to pay back a considerable portion of the money owed. This is usually at least 40-50% of the total debt owed. With an IVA you are also unable to make individual arrangements with any of your creditors, they will all be part of your agreement.
One pro of an IVA, that many debtors approve of, is that your financial situation will stay private. It will not be made printed in your local newspaper as with bankruptcy and can only be found in the insolvency register when searched for.