An IVA or an individual voluntary arrangement is a legally binding agreement that is made between your creditors and yourself. It is designed to help individuals pay off their debts in an affordable manner and is a form of insolvency that may affect your financial condition in various ways. When deciding on whether an IVA Is appropriate for you, it is important that you acquire impartial and professional advice. The reason for that is because there are several obligations and restrictions that must be considered when you are deciding on an IVA.
There are thousands of people that choose to start an IVA every month since it is a suitable debt solution for them. However, there are some considerations that you should account for when you are making the decision of whether or not an IVA is appropriate for you. The following questions will help you make the decision in a better manner.
Is It Affordable for You to Make IVA Payments?
You should know what you can afford to pay every month towards your debts before you decide on whether an IVA is appropriate for you. This can also be considered as your surplus or disposable income, and to make it work you should review your personal expenses and income. To calculate that you need to fill out a financial statement that has details related to your living expenses and household income. This will ensure that you can calculate your surplus amount.
If you wish to start an IVA, your disposable or surplus income should roughly be somewhere in the range of £100-£150 every month. You can also choose to start off with a figure that is less than that if you have knowledge that the amount will increase in the future.
What Debts Are Included in the IVA?
The only types of debts that are included in the IVA are unsecured ones. These mainly include things such as storecard and catalogue debts, Payday loans, bank loans and overdrafts, and credit cards. You can also add other types of unsecured debts like Tax Credit overpayments as well. Once your arrangement starts, any Tax Credit overpayments that you include will be overturned.
Also, you will not be able to enter secure debts like a car HP agreement or mortgage into the arrangement. You do have the chance to add these living expenses in your budget if you wish to continue making these payments.
Is an IVA Appropriate for Homeowners?
If you’re a homeowner, then an IVA should be the best thing for you. The property will be protected legally from creditors once the arrangement begins, and they can no longer secure debts against it. However, you will still need to release equity for your creditors but this will generally take place in the last year of the Arrangement. If you can’t release the equity for your property due to some reason, it is going to be ignored. However, you must then add extra payments for a year into the Arrangement.
Who Will Know That You Have an IVA?
The IVA is a discrete process, and the only people that will know you have started the Arrangement are going to be your creditors. Your employer isn’t going to be notified which is good news for employed people. However, there will be a record of the Arrangement on your credit file, and if you have a job where you must have a good credit rating, and your employer carries out a credit check against you, then it isn’t going to be ideal for you.
Uday Tank has been working with writing challenged clients for over four years. His educational background in family science and journalism has given him a broad base from which to approach many topics. He especially enjoys writing content after researching and analyzing different resources whether they are books, articles or online stuff.