IVA Pros and Cons
The pros and cons of starting an IVA
We receive a lot of calls and emails from the public asking about; "IVA pros and cons?"
Entering into and maintaining payments to the IVA will demonstrate to your creditors your commitment to repay a proportion of your debts by way of a formal legally binding arrangement. For them it will allow a percentage of the debt to be repaid back, with their approval. When an IVA has been proposed to your creditors, they will also have received a comparison to Bankruptcy. This shows the creditors what they could receive back from both options. As the fees in an IVA are generally a lot less than in Bankruptcy, the return for the creditors in an IVA, is better.
By comparing the IVA pros and cons it will help you understand the IVA process better.
IVA Pros
- An IVA is private so your friends and family will not find out about it. The pros of this is that there is not social stigma with an IVA.
- After an IVA is completed you are debt free.
- An IVA acts as a safeguard to losing your home.
- A person subject to an IVA can continue to have a current account. Please note the person will not be allowed an overdraft facility though.
- An IVA will have a person debt free in up to 5 years.
- Up to 75% of your debt can be written off in an IVA
- With an IVA you only pay back what you can afford.
- With an IVA your creditors can not contact you.
- An IVA provides protection from court action.
- An IVA will stop the creditors making demands
- An IVA will help repair a person’s credit rating.
- A major pro of an IVA is your name will not appear in the local paper. This differs from bankruptcy where it is a legal requirement.
- A business owner can continue to trade with an IVA
- There is no publicity with an IVA
- You have more say in the choice of assets made available to the creditors in an IVA.
- There are higher dividends to creditors with an IVA.
- You can continue to work in the financial sector (FSA) or HM Armed Forces / Police Force with an IVA, where in bankruptcy this would not be possible.
- You can continue to be a company director with an IVA. In bankruptcy you cannot.
- There is no professional disqualification with an IVA.
- You can continue to hold public office positions with an IVA.
- The costs of an IVA are lower than bankruptcy.
- You keep your assets in an IVA.
- The creditors prefer IVAs because they can claim tax relief against bad debts.
- Creditors who do not vote for an IVA are still bound by the IVA. This is law.
- Creditors who vote against the IVA are still bound by an IVA. This is law.
- There are fewer restrictions in an IVA compared to bankruptcy.
IVA cons
- The IVA period is longer than bankruptcy. An IVA can last up to 5 years, whereas bankruptcy is just 1 year.
- An IVA is recorded on the Individual Insolvency Register, which is searchable by the public if they wish to look at it.
- With an IVA you cannot leave out some creditors. I you do then the creditors can still pursue the creditors.
- The IP will monitor wage slips, salary updates regularly. If you earn more then you pay more in to the IVA.
- 5% of 5 years IVA cases actually can last 6 years.
- With an IVA the insolvency practitioner may request some of the equity in your property is released as part of the IVA deal with creditors.
- The cons of an IVA is that you must have at least £15000 of debt, to at least 3 creditors.
- To do an IVA you must be able to afford to pay at least £200 per month.
- An IVA is what we call a “golden handcuffs deal”. It is a great deal but you are locked in for up to 5 years.
- People in an IVA cannot get further unsecured borrowing.
- If you have
- An IVA will show up on the credit report for up to 6 years.
- An IVA means the person will need to pay back substantially more than an IVA.
- An IVA must have the agreement of at least 75% in value of the total debts, of those who decide to vote.
- If an IVA fails then the person will be made bankrupt.
- An IVA can not guarantee the protection if the home because the creditors may insist that the assets are still attackable.
- An IVA is set up and run by an insolvency practitioner (IP). Some IPs are expensive.
- An IVA is legally binding.
- If you lie on an IVA application it is a criminal offence.
If you wish to discuss the pros and cons of an IVA procedure and understand how it can help you please complete the following form or telephone freephone 0800 074 6918.
IVA Menu
- IVA (Individual Voluntary Arrangement) Overview
- Starting an IVA
- The IVA process
- IVA Monthly Payment
- IVA Pros and Cons
- IVA FAQs - Frequently Asked Questions
- Starting an IVA
- The IVA procedure
- What is an IVA?
- IVA Enquiry Form
- How to start an IVA
- Who can an IVA help?
- IVA's - Facts & how they work
- Benefits and Advantages of an IVA
- Who can an IVA help?
- IVA - Help and information
- How an IVA works
- IVA - Estimated timescale
- The IVA approval process
- The IVA criteria
- Bankruptcy or IVA
- IVA - What are the costs involved?
- IVA - The documentation required
- IVA - Download forms
- Sample IVA proposals for PAYE worker
- IVA - Guide to creditors Fees
- IVA - Standard Terms & Conditions
- Individual Insolvency Register
- IVA
- IVA lifestyle
- Debt free after an IVA
- Is my home protected in an IVA?
- Chances of IVA rejection
- Keeping my car
- Credit rating after an IVA
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- After an IVA - the end of an IVA
- IVA Help
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- Proposed changes to individual voluntary arrangements (IVAs)
- What happens after an IVA fails?
- IVA Guide Centre
