Consequences of an IVA

Before you consider an IVA you should think about the consequences of an IVA.

An IVA is a legally binding agreement which means that your creditors are bound by your arrangement. However you also have to consider that an IVA lasts a long time and can be tough going. One main thing to think about is if you have a windfall payment this will be available for your creditors. Thinking logically this is only fair, after all you do owe them money.

Credit Rating - Your credit rating in an IVA will suffer in the way any bad debt will. Your IVA is marked on your debtors credit file and this will remain in place for 6 years.

Insolvency Practitioner (IP)supervision - During your IVA you will be supervised by an IP who works on behalf of the creditors. The IP will have access to your financial affairs. If you fail to work with the IP it could result in your IVA failing.

Lack of Flexibility - The creditors have agreed to your IVA which means they are unlikely to change it unless it is in their favour. If your circumstances change and you need to consider reducing the payments they may not be agreed, so please consider the lack of flexibility.

Length of an IVA - It is possible for an IVA to be paid in a lump sum but generally an IVA will normally last for 5 years. This is a long time so please consider the effects before agreeing to an IVA.

IVA Payments - Always consider the amount of money you have to commit to and be prepared to live within this budget for the term of the IVA.