The Pros And Cons Of An Individual Voluntary Agreement

An IVA can assist anyone who is beset by problems clearing their debt. It is an exceptionally persuasive offer to homeowners who are at risk of losing their home if they became bankrupt.

An IVA could help if;
Your creditors have already refused to accept an informal debt management agreement
You have already had an informal arrangement, but you could not keep up with its provisions.

You have so many creditors that an informal debt management arrangement would not be practical. You you are in danger of being made bankrupt, alternatively you are currently bankrupt and you want to reverse that position. You have already had an informal arrangement, but you could not keep up withits provisions.

Your lenders have not accepted an informal debt management arrangement
You are being made bankrupt, or you have already become bankrupt and you want to alter that situation.

You have so many creditors that an informal IVA arrangement would be impractical.

You may have a small company which you would be unable to keep operating if you became bankrupt. You would lose your job if you are made bankrupt, jobs such as solicitor, accountant, the armed forces, police. You have access to a significant amount of money but it is still not enough to completely repay your lenders. You want a formal arrangement with your lenders to receive that lump sum and write off the balance of what you owe.

You have equity in your house. You will not necessarily lose your house if, with the agreement of the IP and your creditors, it can be kept out of the Individual Voluntary Agreement. However, your creditors will usually ask for as much of the equity in your home as they can acquire. With an IVA you are less hampered restricted than with bankruptcy. EG, with an Individual Voluntary Agreement (IVA) you don’t have to inform your building society. Therefore, you can still be able to use your bank account.

The Disadvantages of an IVA
If you fail to keep to the conditions of your IVA, then the Insolvency Practitioner who is supervising your IVA or Individual Voluntary Agreement or your lenders, can ask for your bankruptcy.

If three quarters of your lenders refuse to acquiesce to your proposed Individual Voluntary Agreement (IVA) you are subsequently back to where you started. It will be 12 months before you can make another IVA proposal. You should carefully consider your paperwork.
If you are a property holder, it could be that under the terms of the IVA you have to sell your house. An alternative method is to include a clause in your IVA whereby you get your home appraised after an agreed time frame with a view to releasing the “equity” in your house at that time, to your lenders. Your creditors may agree to you paying monthly IVA instalments for an additional year to cover the amount of equity in your home.

If your money situation alters and you are unable to afford the repayments, unless your Insolvency Practitioner can coerceyour lenders to accept a revised agreement, your IVA will end. This will mean you are facing bankruptcy.

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