Pros and Cons of an IVA

As with any debt solution, it is important to understand both the benefits and the consequences. At Think Money, we won't recommend an IVA unless we're convinced that it's right for you – that the benefits outweigh the drawbacks in your case.

If we don't think an IVA is the answer, there are alternatives. You might be better off joining a debt management programme or consolidating your debts with a loan or remortgage. Either way, Think Money can help.

Before you go any further, take a look at these questions:

  • Do you have significant unsecured debts (around £15,000 or more) to various creditors?
  • Are you unable to meet your monthly repayments?
  • Do you have a reliable income – can you afford to make a regular payment to your debts for the next 5 years?
  • Are you a resident of England, Wales or Northern Ireland?

If you answer 'no' to any of these, an IVA probably isn't the answer to your debt problems – call us on freephone 0800 074 4222 and find out which debt solution is right for you.

If you can answer 'yes' to all four questions, an IVA could well be the ideal solution for you. However, it's important that you understand the pros and cons:

Pros & Cons of an IVA

Pros:

  • Legally binding agreement
  • At the end of the IVA, your unpaid debt is written off
  • Reduce your repayments to one affordable monthly payment
  • Stop interest on your debts
  • Know exactly when you will be debt free
  • Legal protection from action by your creditors
  • Avoid the social stigma and financial consequences of bankruptcy
  • Protect your career – no statutory restrictions on employment (as with bankruptcy)

Cons:

  • Requires commitment - regular payments must be made for the full term (normally 5 years)
  • You can't take out further credit while your IVA is running
  • You may be made bankrupt if you do not stick to the terms of the IVA
  • You may have to:
    • Remortgage to release a proportion of the equity in your property
    • Pay extra if you earn a bonus or overtime
    • 'Trade down' to a cheaper vehicle or sell other valuable assets
  • You will repay more of your debt through an IVA than you would through bankruptcy
  • Your IVA will stay on your credit file for a year after its successful conclusion, which may make it more difficult for you to get credit

« Return to the debt solutions homepage

Top of page

Subject to eligibility and acceptance, debt write-off applies on completion of an Individual Voluntary Agreement, alternative solutions may be offered. Fees payable. Your ability to obtain credit will be affected. Homeowners may be required to remortgage during the term. Calls may be recorded.

Think Money Limited © 2008 All rights reserved. Pennington House, Carolina Way, South Langworthy Road, Salford Quays M50 2ZY. Company reg no: 04926097. Registered in England and Wales.