The Cons or the disadvantages of an IVA

It's fair to say that Individual Voluntary Arrangements (IVAs) are full of advantages for the applicant, however, an IVA does have its cons or disadvantages.

When people research the IVA solution, they can be forgiven for being drawn to the pros or advantages they'll benefit from when the IVA begins, but it is equally important to understand the cons or disadvantages too.

The IVA Cons or Disadvantages

So what are the IVA cons? Well, fortunately, there aren't many, so the main cons are quite easy to list:

  • IVAs have annual reviews:
    Some people wouldn't like the idea of having to submit their financial statement for review each year but an IVA obliges the applicant to do this to establish whether their IVA contributions need to be increased.
  • IVAs have rigid repayment terms:
    The repayment terms of an IVA are quite rigid and failure to maintain payments can constitute a breach of the agreement, although Insolvency Practitioners (IPs) do have discretion to reduce or temporarily stop payments in extreme circumstances.
  • No credit during the IVA:
    Once the IVA begins, the applicant must refrain from obtaining any credit agreements for the duration of the agreement. It's considered a serious breach of the IVA if they do obtain credit and the Insolvency Practitioner could fail the IVA as a result.
  • Credit rating damage:
    An IVA will be recorded on the applicant's credit file and will stay there for 6 years, starting from the date of the Creditors' Meeting. Only when the IVA has been removed from their credit file after 6 years will the applicant's credit rating begin to improve.
  • An IVA is a formal agreement:
    Because the IVA is a formal agreement, the applicant will be legally bound by its terms and, if the applicant is unable to comply with the IVA's terms it will fail. In certain circumstances this could lead to the creditors making the applicant bankrupt.

It's also possible that there will be other issues that may deter someone from taking the IVA route, but these other cons will be specific to their personal circumstances and should be discussed in more detail with one of the IVA specialists here at My IVA Adviser.

Getting a balance view

It's important to get a balanced view point when considering the IVA process and its effects. The Pros, or advantages of an IVA are well documented but, nonetheless, should not completely overshadow the IVA cons.

It's only when you have a balanced view of IVAs that you'll be able to make an informed decision as to whether an IVA is in your best interests.

Professional IVA Advice

The team behind My IVA Adviser are IVA specialists. Our aim is to take the mystery out of the IVA solution for you by explaining how an IVA would be applied to your personal situation.

If you would like to have a chat with one of the team, simply call 0800 088 7503 where one of the team is waiting to help you right now. Alternatively, simply complete this form and one of the team will call you back at your preferred time.

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