IVA advantages

There are a number of 'IVA advantages' that need to be taken into account when comparing this increasingly popular debt solution with its main alternatives - loans, debt management, and bankruptcy.

The advantages of an IVA are:

  • You can write off the part of your debt you can't afford (usually around 50%)
  • Your home is protected
  • It lasts for a fixed period of time (usually 60 months)
  • It's legally binding which means your creditors can't change their minds
  • Interest and charges stop as do the letters and calls

You can't however decide that you want an IVA. It has to be chosen with you and for you by an Insolvency Practitioner that are part of IVA companies.

When advising on whether an IVA is going to be the best solution, there are some really clear criteria that can be used:

  1. Would you qualify for and IVA or is another solution better for you?
  2. Is an IVA the solution that pays off your debts fastest with the least possible money?
  3. Is an IVA the solution that impacts your credit rating the least?
  4. Will an IVA impact your professional career?

Before you can know any of the above a detailed assessment of your debts, your income and expenditure to work out how much you could afford to repay your creditors every month for 5 years needs to be worked out. If that amount is over 25% of you total debt, you're employed or self employed, and owe 3 or more creditors £15,000 or more, there's a chance that an IVA is a debt solution you may want to use.

To help you discover whether you're likely to qualify for an IVA and whether it's the best solution for you use our free IVA advice helpline that is accessed via our charity debt advisors.

Applying for an IVA

To get immediate help now, use our IVA advice service which is accessed via our charity debt advisors. They will assess whether an IVA really is the right solution for you and help you organise it if it is and it's what you want.

Summary

What is an IVA

  • Introduced by the Government in 1986 as an alternative to bankruptcy
  • Typically, you need to owe more than £15,000 and have something to offer to your creditors each month
  • Typically you can write-off 50% - 60% of your debt and pay the balance over 5 years (60 months)
  • Interest and charges stop and creditors can't change their mind
  • Your home is protected but you may be required to release any equity you have
  • Someone enters an IVA in England and Wales every 13 minutes
  • We only recommend organisations that have a track record of getting IVA's accepted by creditors and don't charge upfront fees

Comparison Table Of Debt Solutions

Solutions
Debts Written Off
Legally Binding
Interests & Charges
Residential Status
Fees
Notes
IVA
Yes - Average 58%
Yes
Stopped
Tenant or Homeowner (Eng/Wales)
Yes on average around 20% of the payments you make to creditors
Typically you must have debts over £15,000 and be able to offer yourcreditors about 20% of the value of the debt back over 5 years.
Debt Management
No
No
Many Freeze
Tenant or Homeowner
Yes
In a Debt Management Plan, you will be required to repay all of your debt in full.
Consolidation
No
Yes
New Rates & Charges
Tenant or Homeowner
Yes
Consolidating your debts generally means you'll pay more back over a longer period of time.
Bankruptcy
Yes
Yes
Stopped
Tenant or Homeowner (Eng/Wales)
Yes - up to £700 depending on your circumstances. You may also be subject to a 3 year Income Payments
You need to think carefully about all the affect bankruptcy will have on your home and your employment.
Debt Relief Order
Yes
Yes
Stopped
Tenant
Yes - £90
You must have debts under £15,000 and have little in the way of assets

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