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23/07/2021

Things to consider when researching IVA companies

23/07/2021

Things to consider when researching IVA companies

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If you’re struggling to control your debts and you’re considering entering an Individual Voluntary Arrangement (IVA) to pay off your debts, you will need a reliable IVA provider to manage your arrangement for you.

But with so options out there, how do you decide which is the best IVA company for you? In this guide, we’ll explore what an IVA company is, and things you should consider when deciding which IVA provider to pick.

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What is an IVA company?

An Individual Voluntary Arrangement (IVA) is a formal debt solution that allows you to consolidate your unsecured debts into a series of affordable monthly payments.

An IVA is a legally binding agreement, meaning you will enter into a contract with your creditors – the people you owe money to – and will be expected to maintain your monthly payments over a fixed period of time, usually five or six years. After this, any remaining debt will be written off.

An IVA company is an organisation which specialises in setting up and managing IVAs on behalf of their clients. Your IVA provider will set up your arrangement, deal with your creditors, and distribute your monthly payments among the creditors named in your arrangement.

What should I look out for when deciding on an IVA company?

While there is no surefire way to tell if an IVA company is right for you, there are certain things you can look out for that should give you an indication of whether you’re dealing with a legitimate IVA company.

Do they offer free debt advice?

No matter which IVA company you use, there will be fees involved in arranging your IVA, including administration fees and the payment of your Insolvency Practitioner. What you should never pay for is IVA advice.

The best IVA companies will offer you free initial advice. That means everything you discuss with your debt adviser before you officially enter your arrangement, from expenditure checks to financial counselling, should be completely free of charge.

Can they offer you an Insolvency Practitioner?

An Insolvency Practitioner (IP) is a debt professional responsible for the management of your IVA. When you choose your IP they will help you draft your repayment proposal, and once your arrangement starts, they will act as the official supervisor overseeing your IVA.

A good IVA company will always have a strong relationships with Insolvency Practitioners and be able to point you in the right direction. The best IVA companies will have access to their own Insolvency Practitioners, meaning they can handle the entire IVA process in-house.

Do they offer debt solution alternatives to an IVA?

Individual Voluntary Arrangements are the most popular debt solutions in the UK and are perfect for people who live in England and Wales, owe more than £6,000 in debt, and have regular source of income which they can use to make their monthly contribution.

That said, IVAs aren’t for everyone. IVA firms will of course specialise in IVAs, but they should be able to offer you information on alternative debt solutions, from Debt Management Plans to Debt Consolidation Loans, in case you don’t fit the criteria for an IVA.

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Signs of IVA companies to avoid

Unfortunately, there are quite a few untrustworthy organisations operating within the insolvency sector. Below are signs of a bad IVA company.

Do they charge upfront fees?

Certain IVA companies will try to charge you expensive fees upfront. This is a red flag. While you should expect to pay a fee for your IVA, legitimate companies will allow you to pay in monthly instalments as part of your debt repayment plan.

Do they make claims about guaranteed acceptance?

Whether you’re accepted for an IVA or not depends on your personal circumstances and, most importantly, your financial circumstances. While some providers are rightly proud of their high acceptance rate (percentage of applicants who are accepted) or low failure rate (low amount of IVA fails) no responsible IVA company should make unrealistic claims that guarantee you’ll be accepted.

Are their reviews too good to be true?

Similar to the above, no IVA company is flawless. No matter how hard their team of experts work for their clients, some of them are going to be rejected for IVAs, or have their IVA fail once they enter the arrangement. This should be reflected in their reviews. You should be suspicious of a company that has no negative reviews – if it seems too good to be true, it probably is.

Are IVA companies and debt management companies the same thing?

IVAs and Debt Management Plans are two different types of debt management solutions, suited to different types of people.

An IVA is a legally binding agreement which involves you making one affordable monthly payment towards your debts over a fixed period of time, after which you will have the rest of your debt written off.

A Debt Management Plan (DMP) isn’t legally binding, so offers you no protection from creditors. A DMP also isn’t fixed term – the agreement lasts as long as it takes you to repay your debt in full, which means there is no debt write-off at the end.

While an IVA and a DMP are two completely different debt solutions, many debt solution providers offer both services. You should seek debt advice before going ahead with either.

So how do I know which is the best IVA company for my financial situation?

If you’re looking into the possibility of taking on an IVA to help you deal with your debts, you’re going to need an IVA company to manage your arrangement for you.

While there is no on-size-fits-all approach, you should look out for a company that has a good track record, a low IVA failure rate, has plenty of positive reviews (plus a few negative ones), and most importantly, whose advisers treat you like a human being.

Ultimately, the best IVA company is the one that suits you best. If you’d like to find out whether that company is Creditfix, give one of our friendly advisers a call today on 0800 0431 431.

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