If you’re considering going for an IVA, you need to be sure that you understand its implications in both the short and long term. In the right circumstances, a successful IVA can not only handle your immediate debt problems, but can put you in a position to work towards real financial stability in the future.
One of the most stressful aspects of having debt problems is how unpredictable and unsettling the situation can be. If you cannot manage debts, and there is a risk of bankruptcy, it can seem like you will never again be solvent. However, this is not necessarily the case, and IVAs regularly help people to successfully avoid bankruptcy.
Unlike bankruptcy, IVAs are a way to retain control over your debts, and to renegotiate them rather than giving up responsibility for them, which is essentially what happens with bankruptcy. An IVA is a way to settle your debts that is more manageable to you than your current agreements with creditors.
Individual Voluntary Arrangements are tailored to suit your financial circumstances, and should not involve you paying more than you can realistically manage, while still maintaining a good standard of living. When you put forward an IVA proposal, providing enough of your creditors agree to it, it will go ahead for all of the debts you have proposed it for.
Typically, at the end of an IVA, if you have successfully managed to keep making the payments required, you will have paid only a portion of the debts that you originally owed. However, your creditors are prevented from further pursuing these debts, as they agree to consider the debts settled at the end of any IVA they sign up to. This means that your debts will no longer be hanging over you, and you can move on with your life.
While the IVA is elapsing, you cannot get other credit. However, once it is complete, you are again free to do so. The impact on your credit rating of an IVA is far better than in bankruptcy, and so there is a real opportunity to work on improving your credit status over time.