IVA Pros and Cons

If you’re considering an Individual Voluntary Arrangement (IVA), it’s important to weigh up the benefits alongside the things to be aware of. An IVA can be a powerful step toward becoming debt-free – but it’s not right for everyone.

Here’s a balanced overview to help you decide:

Advantages of an IVA

You’ll only repay what you can afford

Your monthly payments are based on your income and essential living costs. At the end of the IVA, any remaining unsecured debt included in the arrangement is written off.

You’ll have a clear end date

Most IVAs last five or six years, depending on your circumstances. Once completed, your remaining included debts are cleared and you can start rebuilding your financial future.

Creditor and legal action stop

Once your IVA is approved, your creditors can’t chase you for payment, apply interest or charges or take further legal action – as long as you stick to the agreement.

You won’t be forced to sell your home

If you’re a homeowner, you won’t be required to sell your property. Depending on how much equity you have, your IVA may simply be extended from five years to six years.

Payments are based on what’s affordable and sustainable

Your monthly payments are tailored to your income and essential living costs, so they’re more manageable.

Interest and charges are frozen

As soon as your IVA is approved, all interest and charges on included debts are frozen.

Support every step of the way

From the moment  you enquire to the end of your arrangement, you’ll have expert guidance and support – including annual reviews to make sure your payments stay affordable.

Things to consider when it comes to an IVA

It needs creditor approval

Your IVA proposal must be accepted by creditors holding at least 75% of the debt value (who vote). Most IVAs we propose are accepted – but approval isn’t guaranteed.

You’ll need to stick to the plan

An IVA is a legally binding agreement. You must keep up with your payments and notify your Insolvency Practitioner if anything changes. If your IVA fails, this could result in a petition for bankruptcy.

Your budget may feel tight

IVA payments are based on what’s affordable – but it may still mean reducing spending on non-essential items for the duration of the arrangement.

It will affect your credit rating

An IVA will remain on your credit file for six years from the date it begins, which may impact your ability to access credit in the short term.

It’s listed on a public register

Your IVA will appear on the Individual Insolvency Register, a government-run online record.

Fees apply

You’ll pay fees for the setup and ongoing management of your IVA. These are included n your monthly payments – you won’t need to pay anything extra. Click here to know more about the fees in an IVA.

Need more information or support?

We’re here to help you understand your options and make an informed decision. Call us on 0800 316 1833 or email help@payplan.com to get started.