WHAT IS AN IVA?
An IVA combines your debt into one affordable monthly payment for a fixed period of time, usually 5 years, after which any remaining debts are written off. If you have equity in your property (i.e. it's worth more than the debt secured on it) you may have to remortgage in the 5th year of your IVA to release equity to contribute towards your outstanding debt. If you are not able to do this, your IVA could be extended for one more year to allow further monthly repayments.
It is a legal agreement between you and your creditors, this means you will be legally bound to the agreement. Your creditors are required by law to freeze interest charges and fees.
YOU COULD BENEFIT FROM...
Lower monthly repayments.
Frozen interest and charges.
No more calls from creditors.
A fixed agreement typically lasting 5 years.
Protection from unsecured creditors.
An IVA may be an available debt solution.
THINGS TO CONSIDER
If you don't stick to your agreed terms your IVA may fail leading to creditors being able to take action against you and interest may resume on your debts.
If the arrangement fails you could be at risk of bankruptcy.
If you have any non essential assets you may be asked to make these available to your IVA e.g. savings plans.
If equity is available but you are unable to remortgage, your IVA can be extended for 12 months.
Creditors could reject the IVA.
An IVA will appear on your credit file for typically 6 years from the date it commences. Whilst subject to the IVA you agree not to incur further credit. Once the IVA is concluded, you may find that it is difficult for you to obtain credit and you may be subject to higher rates of interest.
An IVA will be recorded on a public register.
If you are a homeowner you may be asked to remortgage your property in the 5th year of your IVA to release equity to contribute towards your outstanding debt. Any remortgage can only be to a maximum of 85% of your share of the value of your property and you will only be asked to seek a remortgage if the available equity is more than £5,000.