Advantages of Disadvantages of IVA’s

By now, I am sure most of my readers have seen the leaflets or advertisements on television for the Individual Voluntary Arrangement or IVA. But how much do you really know about it? The lenders make out that it is one of the easiest options out there to deal with your debt problems and for the most part it is. But what makes the IVA so popular and in turn, what are the downsides?

The most frequent question I get asked regarding the IVA is what it does to your credit rating and what sort of information it places on your file. We all know that having large debts and missed payments lead to a poor rating, but what about the IVA? Well, the IVA like any other loan will stay on your record for 1 Year after the loan period has ended. This is pretty standard. It will be marked as an IVA to potential lenders will see you’ve had debt problems in the past, regardless of whether or not your past debts have been removed from your report. The good news is that if you make payments successfully on a 5 year IVA for example, potential lenders may see you as what is known as a good risk and will be more than happy to lend you funds in future. You’ve proven you’re now capable of handing debt / making payments.
The other question I get asked is always regarding the comparisons between the IVA and declaring bankruptcy. First and foremost, the IVA should always be the first option. Never declare bankruptcy, even if it does appear to be the answer to all of your problems. It will only lead to problems in future, in many aspects of your life. The IVA is a great alternative as the vast majority of people are able to meet the payments with ease. However, with that said, you do risk being declared bankrupt should you default on an IVA payment. So be sure you can afford the payments 100% before taking it on.