IVA Plan: Is it Worth it?

IVA (Individual Voluntary Agreement) is a legally-binding agreement aimed at people wanting to become debt-free. Through an insolvency practitioner, a person remains in contact with their creditors. Through a monthly repayment program or a one-time payment, an IVA plan can help you become free of debt within a few years. Typically, the duration of the IVA Plan is five years.

To determine whether an IVA is really worth it, we take a brief look at the pros and cons of the plan. For IVA help and advice, visit IVA Plan. These are as follows:

Pros of IVA

The monthly payments are determined based on your income and expenses. So you don’t have to worry about being able to afford the monthly payments.

If you are unable to pay back the amount in full but have been keeping up with the monthly payments, you do not have to pay any more money, At the end of the term, you will become debt-free. You will no longer be indebted to your creditors.

Your real-estate property is not accounted for when determining the monthly payments. You can avoid putting your property on mortgage. Hence, it protects your assets while ensuring that you are paying back the money to the creditors.

The interest rate for paying the debt back does not change over the term of the repayment. Hence, your monthly payments remain the same.

The IVA offers legal protection to the person paying back the debt. Hence, your creditors cannot pursue legal action against you.

Cons of IVA

If you choose to sign an IVA, it will be present on the record. Hence, it affects your credit score. If you were to seek a loan in the future, banks and other money lending services can review your debt history and decide not to lend you the loan.

Not all debts are repayable through the IVA plan. These include student loans, child support, fines, etc.

In case you inherit some money during the term of the IVA, it will be included into the Plan. The money will be paid to the creditors to reduce your debt.

If you are a homeowner, you may be asked to remortgage your home.

In case you are unable to keep up with the monthly payments, your insolvency practitioner will be forced to terminate the plan. In such an instance, you will have to pay back the debt amount, in its entirety. Moreover, your creditors can then pursue legal action against you.

Why should you opt for IVA?

One thing to keep in mind is that the IVA is legally binding on all parties. These include the person paying back the debt, the creditors, and the insolvency practitioner. The practitioner collects the money on behalf of the creditors. For this, the practitioner may charge additional fee for their services.

For people with debt more than £10,000, IVA is a good way to pay off the debt in a few years. You can get an IVA if you have less loan. In addition to this, IVA is applicable in the case if you have to pay back money to more than two creditors.

For more info visit: citizensadvice.org.uk