What are the benefits of an IVA?
An IVA should be one of the last resorts before bankruptcy – but it does come with several advantages. Here’s a few benefits of an IVA so you can see if it’s the right choice for you.
Realistic way to become debt-free
IVAs are one of the most realistic and affordable ways to clear debt. The amount you pay is based on a calculation of your current income and your essential expenditure. This includes your rent or mortgage, as well as vital bills such as gas, electric, food, council tax and water.
Legally binding terms
Once your IVA has been confirmed and agreed, all creditors are legally bound by the terms. This means your debts are frozen and you won’t be subject to any court action or interest fees. Creditors aren’t allowed to contact you or visit you, so you can rest easy as long as you make your IVA payment on time.
Stable financial option
As your IVA repayment amount is based on what you can actually afford, it can be a very stable option. Based on your regular income, you should always be able to pay your mortgage, rent and bills, as well as make the IVA payment on time. You never know, it could change the way you handle money for the better – an IVA gives you the financial freedom to control your outgoings.
Reduces debt amount
In many cases, an IVA can reduce the overall debt amount. At the end of your agreement, if you’ve successfully made your payments, the rest of your debt will be written off.
Doesn’t affect your job
Some professions don’t accept people who are bankrupt. This includes jobs in banking, accountancy, lawyers, solicitors, the police and armed forces. If you declare bankruptcy you won’t be able to become a local councillor or company director. An IVA means you avoid this major disadvantage. It will be on your credit file, but, for the most part, it won’t affect your career or any future aspirations you may have.
One of the biggest advantages of an IVA is you shouldn’t have to sell your home or move house if you’re renting. Your mortgage repayments are part of the essential expenditure when your IVA terms are calculated. This can give you a sense of security and simultaneously reduces stress.