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IVA Pros and Cons

When you’re struggling under a mountain of debt and just can’t think of a way out besides bankruptcy, an IVA can take off the pressure while allowing you to tackle your debts once and for all. However, like all debt management solutions, IVAs have their advantages and disadvantages that need to be weighed up carefully:


No more hassle from creditors

Once you’re in an IVA your creditors cannot communicate with you again unless it is through your Insolvency Practitioner (IP). Even while you are setting up your IVA, they must deal with your IP because you are protected by an Interim Order granted by the county courts.

All interest and charges are frozen

From the time your IVA is agreed with your creditors all the interest and charges won't be applied (as long as you keep up the repayments) so you don’t need to worry about your debts spiraling out of control any more.

Debt free in 60 months

Unlike normal debt which can grind on for years on end, the debt within an IVA will be paid back at a rate you can afford and any remaining debt at the end of the IVA will be written off. In some cases, this can be as much as 70% of your debt.

No more struggling to make payments every month

Under the IVA you make one fixed monthly payment to your IP and it is based on what you can afford after your living expenses have been met. You won’t have to make a decision between paying creditors and heating your home or reducing the amount you spend on food to a bare minimum. You will have enough to live, although not to be extravagant.

Keep your home

Having to leave your home and move into rented accommodation is one of the greatest fears most debtors have, and is often why they put off dealing with their debts. However, you won’t have to sell your home if you have an IVA, although at the end of the term your IP may ask for your home to be revalued to see if there is a suitable amount of equity in it that could be released.

Keep your job

If you have a job contract with clauses forbidding you from declaring bankruptcy, an IVA is an alternative that will allow you to deal with your debt and keep your job.

Carry on trading if you run a business

IVAs were originally set up to help business people, so they are perfect for helping ring-fence and pay off debt while still trading. And of course, if you have staff you can keep them on the payroll rather than having to make them redundant if you went into administration.


Only unsecured debts are covered

IVAs are only designed to include unsecured debts, such as credit cards, over drafts, store cards and utility arrears. Any secured debts, such as loans or hire purchase agreements secured on your home or other assets, are not covered.

Your credit rating will be affected

There’s no way to avoid an IVA affecting your credit rating, however if you end up being made bankrupt or defaulting on your debt repayments your credit rating will be affected anyway.

You may have to re-mortgage and sell some assets

If you have a good amount of equity in your home, your IP may ask you to release some of it to go towards what you owe your creditors. Often, equity release can be key to getting an IVA proposal agreed, especially if the payment amount each month is lower than they would normally agree to.

If you have assets, such as jewelry, shares or artworks, your IP may ask for them to be sold too. Everyday living items like TVs or washing machines are not included in this. If you drive an expensive car, your IP may ask you to sell it to release some cash and buy a less expensive one.

It will be advertised

All personal insolvencies are advertised in the London Gazette, which is a financial industry newspaper. However, generally only people in the industry read it and it is not on sale in normal shops. Your IVA will also be listed on a public register of insolvencies.

Your pension will be affected

Your IP may see pension contributions as a luxury you cannot afford and ask you to stop paying it. This means for the duration of the IVA you will not be contributing to any retirement plans, which means your retirement income will be affected.

You cannot miss a payment

Under the terms of your IVA, you creditors agree not to take action against you as long as they receive their payment every month. If you don’t make a payment without arranging it first with your IP, your creditors will be within their rights to start chasing you for what you owe or even petition for your bankruptcy.  

If an unexpected emergency crops up which means you cannot make a payment, talk to your IP about it as quickly as possible. They may be able to arrange a payment holiday in return for extending the IVA for a few payments more. This will give you the space you need to sort out the problem and keep you within your IVA agreement.

Do not obtain any more credit

An IVA stipulates you must not take out any more credit for the duration of its term. If you do you are in breach of your agreement, the IVA will have been considered to have failed and your creditors can take action against you.

The only way to ensure you are safe from creditors is to keep making your payment every month on time and stay away from credit.


Do I Qualify?

By answering a few simple questions, our calculator will see if you can qualify to write off your unaffordable unsecured debts.

Be free from the pressure of debt!

An IVA only lasts for 60 months (5 Years). As long as you keep up repayments any unnafordable unsecured debts are written off.
Do I Qualify? No Credit Checks

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______________ is an introducer and not an insolvency practice. With your approval, following advice from your SFS adviser, if you choose to go ahead with an IVA then we will pass a completed fact-find to an Insolvency Practitioner who will then present a proposal to your creditors. © 2018 All rights reserved. is managed by Right Protect Limited.

Debt Solutions Subject to conditions and acceptance. Credit rating may be affected. Repaying debt over longer period may increase the total amount to be repaid. Fees payable if continuing services provided. Alternative free-to-consumer debt advice organisations as recommended by the Money Advice Service. Call charges may apply if calling from a mobile. *You may be required to pay a contribution towards your debts. This contribution is assessed based on your income and expenditure and can last for 60 months or longer.