Common IVA Advantages And Disadvantages

Many people are struggling to cope with debts that they can no longer afford to repay. In some situations a person may even face bankruptcy if their debts reach a level that they cannot control. Clearly no one wants to go down this route and many people will look for an alternative, one of these is an Individual Voluntary Agreement or IVA. This is a contractual agreement that is drawn up between creditors and an individual which is discussed with creditors via an insolvency practitioner. If the creditors agree the individual can then start making repayments that they can afford towards their outstanding debts.

So what are the IVA advantages and disadvantages that you should be aware of with this kind of debt help?

The advantages include - the repayments that an individual may come much more affordable. This will enable the person to budget much better. Clearly this is a better option that not paying and being declared bankrupt.

The agreement is for a fixed term. This means that if the individual sticks to the agreement they will be free from debts by the end of it. Having this kind of aim will give the individual the boost they need to keep making repayments.

Your creditors will not be able to take any form of legal action against you after they have entered into an Individual Voluntary Agreement. Once this has happened you will get the protection from any possible legal action that could be taken against you. You can then start to relax and not live under the constant worry of legal action.

You will not have to be declared bankrupt. When this happens to a person they will face a massive stigma both personally and financially. To avoid this happening you can enter into this kind of financial agreement and avoid bankruptcy.

The disadvantages of this kind of agreement include - it is an agreement that is formal. If a person breaks the agreement and fail to make repayments they could still face bankruptcy. With this in mind it is vital to keep to any agreement that is made in this way.

A person who has this kind of agreement in place will not be able to get credit until it is over. Many people will see this as a plus point, however it can be tricky for people who are looking into credit. If you try to apply for credit during this time your agreement could be cancelled.

You will not get much flexibility in what you are expected to pay. So even if your circumstances change will still be expected to keep the agreement you have made. Obviously become problematic if a person loses their job or is unable to work for some reason.

As you can see there are IVA advantages and disadvantages and you must think about them before entering into this form of debt help. However these agreements can be a good choice for many people who have debts and are facing bankruptcy. So this could be something to think about if you are in this position.

Other IVA Articles: What is an IVA? - IVA Self Employed - IVA Enquiry Form - IVA Debt Management - Will an IVA write off all my debts? - How to apply/start an IVA? - Can I keep my car and house with an IVA?

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