Debt Consolidation is not the Only Alternative!
IVA Advantages and
Disadvantages?
IVA i.e. Individual Voluntary Arrangement is an important debt management tool. However, before opting for this same, it is imperative to understand the conceptual details and the various IVA advantages and disadvantages.
About Individual Voluntary Arrangement (IVA)
IVA is a legal measure, available at the discretion to UK debtors and creditors, to enable a debt settlement arrangement. It is a concept, which allows discussions and thus a compromise between the two parties involved and thereby helps avoid the threatening bankruptcy possibilities. Managed by a licensed insolvency practitioner, Individual Voluntary Arrangement presents possibilities of easier payment terms. Debtors can benefit from the IVA monthly payment plan, by paying lower monthly installments, over a longer time frame. Immediate impact is elimination of insidious debt repayment calls from collection agencies and scope to realign the unmanaged financial priorities. However to decide in the favor of this debt management tools versus the various other options, an overview on the IVA advantages and disadvantages is imperative.
IVA advantages and disadvantages – Section I: Advantage
-
IVA does not affects business proceedings – Unlike bankruptcy, IVA as a legal channel, does not requires the debtor to immediately forgo all assets. Instead the IVA plan fosters the idea of free dealings and therefore allows for the much desired business continuity.
-
With IVA as the chosen payment option, debtors can continue to occupy prominent positions, which might not be possible with bankruptcy. Even for the regular service class, IVA proceedings have no detrimental bearings to be provided for.
-
IVA understands the sensitivity of the debt qualms and thereby ensures that all dealings are treated as a private affair. IVA is not meant for public information and therefore is not advertised, for all to know about it. It is a completely screened negotiation between the debtor and creditors involved.
-
IVA enables lower debt payments to be paid. A key highlight of the IVA monthly payment plan is to ensure debt relief by lowering the due amount.
-
IVA stretches over a longer time frame and thus helps dividing the debt burden.
-
The Individual Voluntary Arrangement is a legal procedure and once entered into, is compulsorily followed by both debtors and creditors. For debtors, this good news, as post signing IVA terms, creditors cannot change their stand and neither can they force faster payments.
IVA advantages and disadvantages – Section II: Disadvantages
Like all notions, IVA too has its set of disadvantages. They are:
-
Failure to comply with the IVA proposal could imply serious repercussions, including asset seizure, etc.
-
Debtors with not very high debt are not eligible for an IVA settlement .
-
Declaration of all assets is mandate while considering IVA settlement. This might not be desired by all under different circumstances.
-
Credit files bear IVA records, thus affecting future credit terms.
-
Respectable income sources are essential for IVA to be valid.
-
IVA requires gaining approval of at least 75 % of the creditors, which might not be an easy arrangement.
Articles on IVAs
What is an IVA? The IVA Process How to Start an IVA
Advantages &
Disadvantages
IVA Payments