Individual Voluntary Arrangements (IVA's)
▲WARNING - IVA
Be careful of companies who offer to put you in touch with an insolvency practitioner for an up-front fee. You can contact an insolvency practitioner yourself without paying a fee to a third party.
Your credit rating remains the same, albeit still poor, but not quite as devastating as a bankruptcy notice attached to your life. You do not have to tell anyone and the chance of keeping your home is a lot higher. I know that you have to be employed and earning a minimum salary to conduct this form of agreement, but you must seek proper legal advice as this is not a path we really ventured down.
We did make brief enquiries through the National Debt line but decided that a monthly payment of approximately £900 would still be too much and we would probably end up in the bankruptcy court sooner or later, so do your homework on this one if you are considering this option.
IVA Pros: You make a single monthly payment rather than dealing with multiple creditors; all future interest charges are frozen. You may be able to write off a substantial sum; creditors can take no further action and must overturn previous actions, such as county court judgments; you will not be required to sell your home, though you may have to release some equity; and it is private and confidential, and will not affect your job.
IVA Cons: An IVA sits on your credit file, preventing further borrowing while the plan is in force. Your credit rating may also hit your ability to borrow after the plan comes to an end. If you fail to maintain your agreed payments, you could be made bankrupt.
▲▲Debt Charity
The Consumer Credit Counseling Service helps about ten thousand people each week, but it recommends taking out an IVA to no more than 4 per cent of consumers who make contact. Chairman Malcolm Hurlston says: ‘The harsh reality is that IVA's are not the best option for most people.’
‘We are concerned that some companies are pushing IVA's where not appropriate solely because of the money that can be made out of management fees,’ added Mr Hurlston. The CCCS is so concerned that it plans to launch its own IVA service to put price pressure on some of the major debt management companies.
