When your financial situation has gotten to the point where you can’t make the debt payments you owe, it sometimes seems like you’ll never again be in a solid position. However, this is certainly not the case, and if you use an IVA you can start working in a positive direction in no time.
If you’re at the point of having to consider insolvency measures, and possibly facing the end result that is bankruptcy, it goes without saying that your credit rating is going to be damaged. However, choosing the right options about how to proceed from this point can make a huge difference to your rating in the longer term.
Bankruptcy naturally has a severe impact on a person’s credit rating, however an IVA typically has a significantly less extreme effect. During the term of the IVA, you will not be able to take out any more credit agreements. The idea of an IVA is to clear all of your current debts, and so you cannot undertake any more borrowing during this time. This makes the IVA much more likely to be effective, and providing you keep to the required payments, your debts will be considered settled at the end of it, and you will be better able to handle further credit as a result.
Once the IVA period has elapsed, you will then be free to start rebuilding your credit rating, and can seek further credit if you choose to do so. This therefore offers you the ability to repair the damage that getting to this point has done to your credit rating so far.
An IVA is therefore not only a way to stop your debts from continuing to grow beyond a manageable point, but also to settle them completely and to ultimately put yourself back in a sound position.
One of the main advantages to an IVA is that your current financial difficulties need not continue to haunt you indefinitely. When your debts are out of hand, it can feel as though you’re never going to be rid of them. However an IVA gives you the ability to do just that, and to start again with a clean slate.