Thursday 28th of January 2010
Individual voluntary arrangements (IVA) can prove beneficial to households with unsecured debts of more than £15,000 as not only do borrowers have to stick to them, but lenders also, a claim suggests.
People who owe a number of creditors money may be worried about them taking legal action or constantly contacting them with phone calls and letters, but under an IVA all contact must be done through a negotiator.
Moneysupermarket.com explains: "The companies you owe money to must stop chasing you for payment as long as you stick to the IVA."
And repayments should be easier to stick to because an IVA answers the problem of climbing interest rates by freezing the interest on unsecured debt and merging different balances into one, monthly and more affordable repayment.
The website does warn, however, that if people do not keep up with repayments then they could be made bankrupt. This may not only result in a home being lost but, in some cases, careers having to end.
A good credit rating is a "must-have item", moneysupermarket.com recently reported.
While an IVA will affect a credit rating for approximately five to six years, once this period is over and debts are repaid, individuals can start to build up their reference.
By Neil Burton
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- IVAs could help worried Britons get their finances in order
