What is an IVA?

An IVA, or Individual Voluntary Arrangement, is a formal agreement legally binding both you and your creditors. It’s court-approved, ensuring creditor compliance.

Advantages of an IVA:

• Halts interest accrual and creditor pursuit.
• Flexibility to include diverse debts.
• Offers a structured repayment scheme tailored to your financial capacity.
• Typically spans 5 to 6 years for monthly payments.

Disadvantages of an IVA:

• Involves considerable setup fees.
• May not be optimal for debts under £10,000.
• Windfalls, like inheritances, might be utilized to settle debts.
• Creditors can claim pre-IVA owed funds even after its conclusion.

Caution regarding Debt Management Companies:

• Debt management companies provide debt assistance but often charge additional fees.
• Opting for an insolvency practitioner independently can be a more cost-effective approach.
• Always ascertain the fees charged by any debt management company before engaging their services.

In essence, an IVA is a powerful debt management tool, putting a halt to interest and creditor pressure. However, it does entail significant setup costs, making it less suitable for smaller debts. Considering an IVA warrants careful evaluation of its benefits and drawbacks. Additionally, exercise caution when dealing with debt management companies to prevent unnecessary expenses.

Please note that as a Credit Union we encourage you to contact your creditors and try to agree a solution within your budget before going down a route that could affect you for many years to come.

For more information, visit the Citizens Advice website.