Are IVAs the Right Debt Solution For You?

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Consumer debt is an all-too-common occurrence, with overall debt levels reaching well above $15 trillion in the previous year. The debt load comes from a variety of sources including personal lines of credit, mortgages, and student loans.

What happens when you find your own debt reaching unmanageable levels? Ever found yourself searching ‘what is an IVA UK?’ Agreements such as individual voluntary arrangements, or IVAs, provide a way for individuals to pay back outstanding debt. Curious to know if IVAs might be a good solution for you? Keep reading to find out more.

What Are Individual Voluntary Arrangements?

An individual voluntary arrangement is a legally binding agreement that allows a debtor to pay back a creditor over an agreed-upon time period. Interest and charges get frozen on debts during the specified time frame, and outstanding debts at the end of the agreed-upon time get written off.

While an IVA does help you pay down your debts affordably, not everyone can qualify for this particular agreement. Let’s take a look at some IVA pros and cons.

Pros and Cons

Let’s start by laying out a few of the positives of an IVA agreement:

  • You pay a fixed payment
  • Interest rates get frozen
  • You receive protection from legal action
  • You can retain your home and vehicle
  • Creditors are unable to contact you

IVA agreements are a good financial alternative to declaring bankruptcy, but there are a few drawbacks such as:

  • Your credit is negatively affected
  • Approved IVAs are public record
  • Missing payments is prohibited
  • You must stick to a strict budget
  • Length of the payment period can last years

How Much Does an IVA Cost?

The amount paid per month will vary from person to person. The agreement itself might include debt from credit cards, utility bills, or overdraft charges. Any number will of course fluctuate depending on the person and level of debt.

To that end, there are no set minimum payment amounts. Therefore, a monthly payment will be situation-based. The insolvency practitioner assigned to your case will be there to manage the entire process, monthly payments included. In general, IVAs are a feasible option for debt management for those with a solid income

Supervision

What role does the insolvency practitioner have? They are there to administer the details of the process. They work on your behalf to find a payment plan that suits your situation.

They take care of items such as:

  • Drafting the IVA proposal
  • Presenting to creditors
  • Distributes payments to creditors
  • Act as the IVA supervisor

You can visit sites such as www.ivaadviceonline.com for more in-depth information regarding an insolvency practitioner’s role in the IVA process.

Covering the IVA Meaning

Hopefully, the above-presented information has been helpful in giving a brief overview of what individual voluntary arrangements can do for debt consolidation.

For more tips and tricks on how to boost your financial health, be sure to browse through our Business Online section. We offer a wide variety of content to help you no matter where you’re at on your financial journey.

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