Could you wipe out debt with an IVA?
Write Off Unaffordable Debt with an IVA
An Individual Voluntary Arrangement (IVA) is a popular debt solution for those with unsecured debts of £12,000 or more. An IVA allows you to consolidate debt into one affordable monthly payment, normally payable for 60 months, after which, the remaining debt is written off.
For those who qualify, an IVA can result in a saving of £1000s over a Debt Consolidation loan.
What is an IVA?
An IVA is a Government created scheme to help those with unaffordable unsecured debts and for whom a debt consolidation loan is not a viable option. An IVA is intended for people with little prospect of repaying their total debts – but want to avoid bankruptcy while repaying as best as they can. IVA acceptance requires approval by your creditors of 75% (by value of the debt).
Benefits of an IVA
- Affordable payments
You only repay what is affordable after taking into account your income and outgoings, which can include any secured loan repayments and other priority debts. - Debt freedom in 5 years.
Provided you maintain agreed payments, in 60 months all unsecured debts will be cleared. - Interest frozen on debts.
You stop paying interest and penalty charges on your debts once your IVA has been approved. Even without the debt write-off potential, this alone could save you £1000′s. - No more harassment and threat of legal action
Once your IVA is in place and provided you are keeping up with payments, creditors can’t take any legal action against you to recover the debt, this includes petitioning for your bankruptcy.
IVA Advantages over a debt consolidation Loan
- Some debt is normally written off with an IVA.
With a consolidation loan, you may be reducing monthly payments, but will be repaying your debts in full, together with ongoing interest and charges over a longer term. This is likely to mean you will eventually pay back more that you currently owe. - You’re not putting your home at risk with an IVA.
If you take out a secured loan on your property, you’re increasing the risk of your home being repossessed if you fail to make repayments. - More room for negotiation later.
If you take out a debt consolidation loan with one company, you will be in a weaker position to negotiate if you experience repayment problems in the future.
Applicants normally need to owe at least than £12,000 to creditors (minimum three lines of credit from two or more creditors) and be able to afford at least £150 per month towards their debts in order to potentially qualify for an IVA. Fulfilling these criteria does not necessarily guarantee acceptance.
If you qualify for an IVA, you should give it serious consideration. For key information about our IVAs, please see: Key Information About IVAs