Get debt free
Are you struggling to pay your debt?
IVA Pros and Cons
When considering an IVA, it’s crucial to consider both pros and cons before committing and think exactly how this solution may or may not impact you. For example, an IVA may affect your credit rating for the duration of the solution; however, you are granted more legal protection with an IVA than with some other types of solutions.
It’s important to put yourself first in any decision-making and remember that what works for others may not necessarily mean the same for you. e.g. dealing with debt in one monthly payment is an appealing prospect, while others prefer dealing with their creditors directly.
Advantages and Disadvantages of an IVA
IVA Pros
- Affordable monthly payments
- Your creditors will write off a portion of your debt
- No more threatening phone calls from creditors and bailiffs
- Creditors must stop contacting you directly
- Interest and charges are frozen
- Clear date for when you will become debt-free
- Your monthly payment covers any fees
- Drops off your credit file upon completion
IVA Cons
- An IVA will be recorded on your credit report for six years
- Only unsecured debts can be included in the agreement
- Your IVA will be visible on the Insolvency Register
- You may have to pay windfalls into the IVA
- It will be difficult to obtain further credit whilst on an IVA
- You may not qualify if you work in certain sectors
Benefits of an IVA:
Affordable Payments
A monthly payment will be calculated based on what you can realistically afford, not what you owe. We will work out your disposable income using what’s left after all your day-to-day spending has been considered.
Debt Write Off
This is one of the most appealing benefits of an IVA – as long as you keep up your monthly repayments, your creditors agree to write off the rest of your debt after five years; possibly six years if you are a home owner.
Stops Phone Calls
If you’re on an IVA, your creditors are no longer allowed to contact you directly to chase your debts – instead, your Insolvency Practitioner will communicate with them on your behalf.
Legal Protection
An IVA is a legally recognised solution, meaning you are fully protected if your creditors breach any terms.
No Interest or Charges
Unlike other plans, an IVA is guaranteed to freeze your interest and charges so your debt will no longer continue to increase whilst you make repayments.
Clear End Date
An IVA typically lasts 5 / 6 years from the date it begins, during which time you know exactly what you will pay back and how much you can expect to be written off.
No Hidden Fees
Any fees associated with IVAs are included in the one monthly payment, so you don’t have any extra costs to worry about. You’ll know exactly what you’re paying towards before signing any agreement.
Drops off Credit File
The IVA will appear on your credit report for the duration of the agreement, but once you’ve made your final payment, this will drop off and any remaining debt written off too.
Drawbacks of an IVA:
Credit File
If you’re on an IVA, it will be noted on your credit report for the plan’s duration, so potential lenders will be able to see this if they carry out a credit check.
No Secured Debts
Any secured debts such as court fines, student loans, mortgage arrears or child maintenance would have to be dealt with separately from the IVA.
Insolvency Register
Your IVA will be visible on the Insolvency Register – a publicly available database – for the duration of your plan.
Lump Sums
If you come into a large sum of money whilst on an IVA – such as a bonus or inheritance – you may be asked to contribute this towards your IVA.
Obtaining Credit
For the duration of an IVA, you will be unable to apply for credit above £500 without consulting your Insolvency Practitioner first.
Your Job
There are certain sectors where being on an IVA may affect your job, including law and financial services. Not all employers will look unfavourably upon an IVA, so it’s always worth checking whether you’d be affected.
Apply for IVA advice if:
- You owe £6,000+ in unsecured debt
- You owe to two or more companies
- You have a regular monthly income
UK Residents have a right to debt help, and several tried and tested solutions can help not only to write off debt but also reduce pressure from creditors and freeze interest and charges.
An Individual Voluntary Arrangement (IVA) could be one option that holds the key to your debt-free future.
- DEBT FORGIVENESS
Your creditors are legally obliged to write off any outstanding balances upon completing your IVA. - REALISTIC PAYMENTS
The amount you pay towards your IVA is based on what you can afford each month. - PROTECTS YOUR ASSETS
An IVA stops your creditors from taking recovery action against you.
Take a look at our online IVA Calculator tool for an idea of how much debt you could write off with an Individual Voluntary Arrangement.
A typical example of an IVA*
- Personal unsecured debt: £39,500
- Number of lenders: 5
| Loan(s) | £17,000 |
| Overdraft | £3,000 |
| Credit Card(s) | £13,500 |
| Store Card(s) | £4,500 |
| Utility Bill(s) | £1,500 |
| Total Owed | £39,500 |
Your monthly debt repayments:
£689
Previous
£137
New
DEBT REDUCED BY 78%
*A debt write-off amount of around 78% is realistic based on the average figures of IVA clients between June 2023 to June 2024. We assess each customer individually based on their circumstances and payments to the IVA are based on what is realistic and affordable.
Check if you qualify
Still want to know more about an IVA?
If you still want to learn more, you can read all about an IVA, where we go into even more detail about this particular debt solution.
Alternatively, why not speak directly with one of our friendly assessors so we can answer any further questions you may have.
Money Advice help over 3,000 people in the UK every year
Our team of experts help thousands of families get their finances back on track with an IVA.
Is an IVA right for you?
We can discuss your eligibility for an IVA
Prefer to speak later?
We will offer support to help you find a solution.
To find out more about managing your money and getting free advice, visit Money Helper, an independent service set up to help people manage their money.