Pros and Cons of a Self-Employed IVA
Taking out a self-employed IVA offers security and protection: it allows you to repay your debts with affordable regular payments to your creditors while you continue to work.
As with all debt solutions, there are advantages and disadvantages, depending on your situation and priorities. We’ve summarised a few things to keep in mind to help you decide whether it’s the right solution for you.
- You can continue to trade, knowing that you are protected from your creditors chasing you or taking legal action to recover what you owe.
- Tax, PAYE and VAT arrears can be included – money you owe to HMRC can be added to your arrangement.
- Your unsecured debts will be written off. Your creditors are obliged to write off any outstanding balance if you successfully complete your IVA.
- You don’t have to sell your business assets and can keep any tools, machinery and stock that you need to carry on running your business.
- You can structure repayments to suit your cash flow – if your income fluctuates, you can make flexible payments. This can be especially useful if your work is seasonal.
- Frozen interest and charges. Once your self-employed IVA is agreed, your debt is frozen and your creditors won’t be able to add any additional interest or charges to it.
- No hidden costs. Your IVA is easy to set up and all fees are included in your monthly payment so you know exactly what you are paying.
- Ability to prioritise creditors. If you owe money to certain suppliers and your business depends on being able to purchase from them, you can prioritise their repayments.
- Your home will be safe – unlike with bankruptcy, in a self-employed IVA you won’t be forced to sell your home.
- Peace of mind. You’re taking control of your debts. Once you’ve made all your agreed payments in full and on time, your arrangement is complete and whatever remains of your unsecured debt will be written off.
- Only unsecured debts can be included in your arrangement. Secured debts, like your mortgage, will still need to be paid outside of the IVA.
- Your credit rating will be affected – your arrangement will be recorded on your credit file for six years which will affect your ability to get further credit.
- Insolvency Register – your name will be included on the Insolvency Register which is available to the general public (although nobody will be able to see this unless they search your name on the register, so they’d have to know about your IVA anyway to bother searching for it).
- Remortgaging your home – you might be asked to release equity in your home and pay this into your self-employed IVA. If this isn’t an option, you may be able to extend your arrangement for an extra 12 months.
- Risk of failure – if you don’t stick to the agreed terms of your arrangement or miss payments, your arrangement may fail.
- Self-employed IVAs are only available if you live in England, Wales or Northern Ireland
Once you’ve had a chance to consider what’s involved in a self-employed IVA, call our friendly team on 0800 316 1833 , and we’ll go through how it works and help you apply. You can also check your options online if you’d like to explore other ways to deal with your debt.