An IVA is a popular debt solution that can help you to become debt-free. It is the most popular type of debt solution in the UK and has helped many people to get their finances back on track.
Keep in mind that IVAs are only available to residents of England, Wales and Northern Ireland. If you live in Scotland, you may be able to apply for a Protected Trust Deed instead.
When you set up an IVA, you will make monthly payments for a period of 60 months (5 years). These payments will go towards your debts and insolvency practitioner fees, and any leftover debt at the end of the IVA will be written off. This means that you could become debt-free within 5 years!
Being debt free will finally mean that you will be debt-free and no longer have to worry about making payments towards your debts. However, it’s important to note that an IVA will affect your credit score and will remain on your credit file for 6 years. This may make it difficult to obtain credit in the future, but there are steps you can take to improve your credit score after an IVA.
Although an IVA is a proven successful solution for many people with certain types and levels of debt, extra considerations should be made for how an IVA could affect important parts of your life.
An IVA could affect your job as your employer may be notified of your IVA if you are required to provide financial information as part of your job. In some cases, this may impact your employment status. However, you should speak to your employer about your IVA as they may be understanding and provide support. If you end up seeking a new role during your IVA it might prove difficult as some employers check credit ratings as part of their recruitment process.
An IVA will have a very negative affect on your credit rating simply because it shows lenders that you cannot manage your money and have needed help. This can make it difficult to get a mortgage, loan or even a mobile phone contract in the future.
Entering into an IVA can have a significant impact on your mortgage. If you have equity in your home, you may be required to remortgage six months before the end of your IVA in order to release funds that will be used to pay off your debts. This can be a difficult decision to make, as it may put your home at risk if you are unable to keep up with your mortgage payments. If you enter into an IVA and are unable to keep up with your mortgage payments, you may lose your home. Therefore, it is important to weigh all of the risks and benefits before deciding whether or not an IVA is the right debt solution for you.
Your IVA could also affect your partner. If you are married or in a civil partnership, your partner’s income and assets will be taken into account when calculating your IVA payments. This means that your partner may have to make sacrifices in order to help you meet your IVA payments. In some cases, this can put a strain on your relationship.
Lastly, an IVA may affect your reputation, as your friends and family will be aware of your debt situation. This can be a difficult thing to deal with, but it is important to remember that an IVA works for many people and you should not be ashamed of needing help to get your finances back on track.
In conclusion, an IVA is a proven successful solution for many people with certain types and levels of debt, however extra considerations should be made for how an IVA could affect important parts of your life. It is important to weigh all of the risks and benefits before deciding whether or not an IVA is the right debt solution for you.