An Individual Voluntary Arrangement will have two sides to the agreement.  You will find that a n IVA has advantages and downsides as with any financial deal.  To help you understand the advantages of IVA’s we have a list of information below.

To start, you should know that an IVA has a fixed amount of time attached to it.  This time is usually five years, but can be extended depending on your creditors.  The amount of time of an agreement offers you control in your finances.  You know exactly how long you will need to deal with the debt.

With IVA’s you also have a set monthly payment.  This payment is a minimum amount.  You are able to pay more than the minimum payment if you have the funds.  However, you must pay the minimum amount.  Again this helps you control your expenses in the month.  Rather than having to guess at the amount each month you do have a steady amount.

The interest and late payments on the account are frozen as soon as an agreement has been reached.  Some companies may offer to freeze the account as soon as discussions start.  It is up to the creditor.  Once the agreement is signed there can no longer be interest or late fees associated with the account. 

IVA’s are often an arrangement based on what you can afford to pay in a month.  The creditor and insolvency professional will look at your income, debt, and expenses.  Then the amount will be offered for the pay off. 

You can pay the debt in one lump sum or in monthly instalments.  This advantage helps you make the best agreement that meets your needs.

An IVA is going to damage your credit scores and history.  Any company looking at your history can refuse a new line of credit based on your scores.  However, there is an advantage to the IVA.  During the time you are working on paying your debt down you can use prepaid credit cards. This will help to counteract the damage of the IVA. 

Once the payments are complete your credit scores will improve because you can borrow money such as loans or mortgages again.

You will have a legal binding agreement that tells you exactly how long it will take to be debt free and the payment you owe.  While we mentioned this above it is one of the most important advantages.  The fact that it is a legal agreement means that you have protection in a court of law from any collection actions or court action a creditor may try during the IVA, as long as you keep to the agreement you made.

The IVA is a private arrangement.  In other words your name does not appear in the papers, but it can be found on the insolvency register on the internet.

Your professional status is going to be unaffected.  You cannot lose your job due to an IVA.

As you can see there are several advantages to making an individual voluntary arrangement with your creditors.