Should You Apply For An IVA
There are some benefits for people who decide to enter into an IVA, but there can also be some disadvantages which you should be made aware of. Should you apply for an IVA, it is a matter of balancing up the pro`s and con`s so that you can decide if an IVA would be to your overall advantage.
As we know, an IVA is a binding legal agreement between an individual, or indeed a couple, and their unsecured lenders. The purpose of the arrangement is to protect their assets and to protect them from litigation and bankruptcy, whilst they repay a reduced and affordable amount to their lenders over a set period of time, which is ordinarily 60 months. The whole process is prepared and supervised by a licensed Insolvency Practitioner.
Now the benefits are:
1. The client pays just one single affordable monthly amount.
2. Visits, phone calls and correspondence from creditors cease immediately.
3. No further interest charges, penalties or fees can be added by lenders.
4. A large part of the clients debt, around 50% to 70%, is written off.
5. The client is completely debt free after the 60 month period.
6. The client is absolutely protected from Court action by creditors during the duration of the IVA.
Now the disadvantages can be:
1. The client will have all affected accounts closed and cards cancelled.
2. Clients normally have to arrange a new bank account.
3. The client will probably have to adjust to a more modest lifestyle during these 5 years.
Obviously the fact that you can write off such a large part of your debts is a very attractive proposition, and also the fact that your creditors can no longer contact you in any way, or add more interest or fees to your outstanding debts, but you must also carefully think about the downside so that you are sure it will be worth your while to go down this route.
You must realise, should you apply for an IVA, that you will be tied to the payment scheme for the next 60 months, and the payments must be made on time so that you do not get behind. Also, you will find that it is hard to obtain credit as obviously the fact that you have applied for an IVA will mean that your credit rating will be affected.
If you are finding it impossible to keep up payments to your creditors and you like the idea of being able to write off a large proportion of your debt then the option of an IVA will I am sure be a very attractive one.
As we know, an IVA is a binding legal agreement between an individual, or indeed a couple, and their unsecured lenders. The purpose of the arrangement is to protect their assets and to protect them from litigation and bankruptcy, whilst they repay a reduced and affordable amount to their lenders over a set period of time, which is ordinarily 60 months. The whole process is prepared and supervised by a licensed Insolvency Practitioner.
Now the benefits are:
1. The client pays just one single affordable monthly amount.
2. Visits, phone calls and correspondence from creditors cease immediately.
3. No further interest charges, penalties or fees can be added by lenders.
4. A large part of the clients debt, around 50% to 70%, is written off.
5. The client is completely debt free after the 60 month period.
6. The client is absolutely protected from Court action by creditors during the duration of the IVA.
Now the disadvantages can be:
1. The client will have all affected accounts closed and cards cancelled.
2. Clients normally have to arrange a new bank account.
3. The client will probably have to adjust to a more modest lifestyle during these 5 years.
Obviously the fact that you can write off such a large part of your debts is a very attractive proposition, and also the fact that your creditors can no longer contact you in any way, or add more interest or fees to your outstanding debts, but you must also carefully think about the downside so that you are sure it will be worth your while to go down this route.
You must realise, should you apply for an IVA, that you will be tied to the payment scheme for the next 60 months, and the payments must be made on time so that you do not get behind. Also, you will find that it is hard to obtain credit as obviously the fact that you have applied for an IVA will mean that your credit rating will be affected.
If you are finding it impossible to keep up payments to your creditors and you like the idea of being able to write off a large proportion of your debt then the option of an IVA will I am sure be a very attractive one.
Source...