If you’re considering getting into an IVA or an Individual Voluntary Agreement, then there are a few things you need to know and also consider. The IVA for the most part acts the same way as a regular loan. Once you sign, all of your debts will be cleared using the funds from the IVA and you will be left with one single, month to month payment that will work towards clearing your debts that the IVA has covered.
A question I get asked a lot if what is an IVA? Well, a typical IVA usually lasts 5 years or 60 months and will stay on your credit record for 1 year after the end date of the loan. Whilst the IVA will indeed stay on your record, if you’ve made payments successfully over the period of 5 years and have not defaulted on any – it can actually work in your favour. Having an IVA on your record does not mean that your credit record is permanently ruined like it can be in situations of bankruptcy. If you’ve made the payments, as you should, you’ll be considered a good financial risk, despite your history.
The IVA is typically a little bit riskier than a standard person or secured loan though however. Should you default on a payment on your IVA plan then you may be forced to file bankruptcy. However, with that said, most IVA agreements are structured in a way that even in your dire financial situation, you’re still able to make the necessary payments on the loan. This is the whole point of the IVA in the first place, to help you get out of debt. No lender is going to sell you an IVA that you can’t afford. It’s no good to them if you suddenly default and are forced to declare bankruptcy.
The IVA is also a particularly popular option, as you’re not charged an arrangement fee from the lender in most cases which can be a big plus.
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5 Aug, 2009