The Truth About IVAs
Nov 05, 2021 ● 6 min
If you’re looking for help with debts, you may be considering an IVA – but what exactly can you expect from one?
Unlike other debt solutions, an IVA is a legally binding and formal agreement. It is a Government backed scheme that has been developed for the purpose of allowing borrowers the chance of getting on top of their debt and having a second chance with their finances.
The important thing to consider about IVAs and any debt solution is that there is no ‘one-size-fits-all’ approach – what works for others may not be an appropriate route for you. We’ve listed some information below that can help demystify certain ideas that you may have regarding IVAs whilst you’re trying to find the best solution for you.
This may be the biggest step in your journey and whilst this may feel daunting, the truth is that applying for an IVA can actually be a very straightforward process. Reaching out to an IVA specialist will definitely help, as you can be assured of exactly what you need to do in order to get the ball rolling.
You will be clearly informed of what documents you need to provide regarding your personal and financial information. Don’t worry though, if you’re unsure of exactly what debts you owe, a soft credit search can be carried out on your behalf. This will bring up the money you owe, and will not leave a negative impact on your credit file.
An IVA is not designed to drain your bank account – providing an accurate account of your household income and expenditure at this stage will ensure that your proposal will be calculated to truly reflect what you can reasonably afford to pay per month.
Who To Trust
You may feel that anybody offering support to you in financial difficulty is only after money in return, however, this is not necessarily the case. As an IVA is a legal agreement, anyone involved in this process is obliged to be clear, honest and transparent with you.
If you are approved for an IVA, then your case will be handled by a licensed Insolvency Practitioner – this is someone authorised by the Insolvency Practitioners Association, bound by a Code of Ethics. They are the ones who will oversee the process for you, as well as deal with your creditors directly so you don’t have to. Any queries or concerns you may have can be dealt with by them.
If you’re feeling unsure, there are many companies out there that can support you in this journey, and it is always best to seek financial advice before agreeing to anything.
At Money Advice we are specialists in IVAs and we are also aware of other eligible solutions, so you can be assured that through our free, non-partial service we will guide you through your options.
The decision will be yours, but if after weighing up your options you are wanting to opt for an IVA then our team of experts can help you with your application to optimise your chances of being approved.
Becoming Debt Free
An IVA (Individual Voluntary Arrangement) is intended to help you clear your debts, providing you with the opportunity of a fresh start. It may not seem realistic that your creditors would want to have such large amounts of money owed to them written off, but in reality an IVA suits both parties – your creditors are essentially receiving a pledge to have some of that money back, whilst you are only paying what you can actually afford.
As long as monthly payments are maintained and any changes in your circumstances are declared, then your creditors are obliged to uphold their side of the agreement. They must freeze interest and extra charges, and cease to contact you directly to chase your debts for the duration of the IVA. In addition, they will write off the agreed percentage of the money owed, meaning at the end of the IVA you will be debt free.
Any other fees involved in running your IVA will also be covered by your one monthly payment, so you can be assured of exactly where your money is going.
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