IVAs – Advantages and disadvantages

12 Oct

If you’re considering an individual voluntary agreement or “IVA” it’s important that you understand their advantages and disadvantages:

Firstly – there’s no stigma. An IVA is a completely private agreement between you the debtor and your creditors. Your details won’t be advertised in the local paper but will be listed on the “Personal Insolvency Register”.

An IVA can last up to five years, whereas bankrupt is normally discharged after one year or less. Unlike with bankruptcy, an IVA does not legally restrict you from obtaining other credit, though the individual IVA proposal may actually do. With bankruptcy, on the other hand, you can get credit of up to £500 without declaring your bankruptcy status. And once your bankruptcy has been discharged there’s no legal prevention to your receiving credit.

An IVA is often considered better for business people as bankruptcy usually dissolves any partnerships and prevents the bankrupt from being director of a company. Anyone who is self-employed trader has to disclose their bankruptcy when seeking credit, for example – unlike with an IVA

Bankruptcy generally takes longer and there are bigger fees involved – though you don’t usually have to pay them. With an IVA, there are two separate fees which are rolled into the monthly contributions. Your Insolvency Practitioner will agree these fees with your creditors who will usually accept less than the money you actually owe in return for you not declaring bankruptcy.

The main advantage of the IVA over bankruptcy is the lack of seizure of your assets – namely, your home. An IVA usually excludes property altogether.

If you seek expert advice form the right objective source in the first instance – you should be able to find a suitable professional expert advisor who will help you decide whether an IVA, bankruptcy – or perhaps a debt management plan is the wisest course of action for you to take. The Citizen’s Advice Bureau is a good starting point in this regard.

No comments yet

Leave a Reply