How an IVA could help meet your money goals
What are your financial goals?
Do you dream of paying off your credit card debt? Mastering the art of creating a realistic budget and sticking to it? Or do you have bigger ambitions such as owning your own home?
Yes, some people may view being good with money as being able to live a fabulous lifestyle, however, the reality is for most people it’s the simple things in life that can mean the most.
Planning ahead for the future can seem daunting, especially if you’re struggling with your finances, but living with debt doesn’t mean you can’t meet your money milestones.
There’s no denying that there’s a stigma that surrounds money problems – with debt often rarely being a topic of conversation – but admitting that you’re struggling can be the first step to turning your life around.
A fresh start
Living with debt can be all-consuming as you try to keep up with the never-ending juggling act of trying to keep on top of bills as the people you owe money to continue to chase what you owe.
The most important thing is to remember that you’re not alone and there is support available to help give you a fresh financial start – allowing you to meet your money goals.
Insolvency might seem like a strange place to start when it comes to the quest for financial success, but it can be a way to rebuild your credit score and regain control of your spending.
Here we shine a light on how an IVA can help you make the money milestones you’ve always dreamed of.
What is an IVA?
An Individual Voluntary Arrangement (IVA) is a formal, legally binding agreement between you and the people you owe money to which allows you to repay your debts with one affordable monthly payment.
What debts can be included in an IVA?
An IVA could potentially be the right insolvency arrangement for you if you’re struggling with unsecured debt.
IVAs are designed to include unsecured debts including:
- Credit and store cards
- Payday loans
- Personal loans
- Utility bills
- Council Tax arrears
- Debts to family and friends
It’s important to note that secured debts such as mortgages cannot be included in an IVA, nor can court fines or child support arrears.
What are the advantages of an IVA?
When it comes to dealing with debt, considering insolvency as a potential solution can be unnerving. However, there are advantages to entering into an insolvency agreement to help deal with your debts.
An IVA can be a way to clear the debts that you owe and start afresh, allowing you to rebuild your credit rating and continue working towards your financial goals – whatever they may be.
Advantages of entering into an IVA include:
- No up-front fees
- Once your IVA is approved, your creditors can’t take any further action against you.
- All interest and charges are frozen.
- An Insolvency Practitioner will help you prepare your proposal, including agreeing the level of household and personal spending guidelines.
- You’ll make one payment each month, based on what you can afford.
- If your circumstances change, your Insolvency Practitioner can request arrange a payment break from creditors.
- An IVA lasts between five and six years, with the remaining balance of what you owe to unsecured creditors written off after this time.
Be wary of disadvantages
However, as with all types of debt help, it’s important to be aware of the potential disadvantages you may face.
- An IVA will last between five to six years and will have a negative impact on your credit rating.
- There will be restrictions placed on your spending during the course of the arrangement.
- Not all debts are included in an IVA. Debts such as court fines, social fund loans and student loans are exempt.
- Creditors may reject your application for an IVA.
- If you’re a homeowner, you may be required to release equity in the final year of your arrangement through re-mortgaging. If you’re unable to re-mortgage then your arrangement could be extended by a year in lieu of the equity available.
- If you find yourself in receipt of any windfalls or inheritance over and above £500 these funds will be taken into the IVA.
- If you fail to keep up with IVA payments then your arrangement could fail which could lead to bankruptcy.
When seeking help with your debts, it’s important to speak to a debt advisor who can guide you through all of the information you need to know about an IVA or indeed any other type of debt help.
Where to find help
Being open about financial struggles isn’t easy, but one conversation can change everything. Creditfix is the UK’s largest personal insolvency firm and is proud to offer friendly and professional advice to those in need, free of judgement.
We’ve helped more than 141,000 Brits across the country regain control of their finances by listening to their stories and arming them with information about what debt help is available to allow them to make an informed decision of their own.
For more advice and to find out how debt advice can help you meet your financial goals, call 0808 2234 102.