Individual Voluntary Arrangements (IVAs) have a number of disadvantages which should be considered before entering into the IVA agreement.

One disadvantage is that the monthly IVA payments can often be increased if your income increases but they are far less likely to be reduced. An IVA repayment is set at a “reasonably affordable” level at the outset; so the agreements are likely to be failed if you cannot meet the IVA repayments due to a significant change in your circumstances.

For the IVA to be accepted at least 75% of your creditors who actually vote have to vote in favour of an IVA. Therefore if you have a creditor who is responsible for more than 25% of your total debt, and they vote against the IVA, then the IVA proposal will fail.

In pure financial terms if you do not have any assets or significant income you may be better off applying for bankruptcy. After the new Law on bankruptcy was passed under The Enterprise Act a first time bankruptcy now only lasts for one year with a repayment period of 12 months to 36 months. In an IVA the repayment period lasts normally for 60 months so you are committing to repay for a longer period than would be the case in bankruptcy. Obviously many people will opt for an IVA to avoid the social stigma of bankruptcy, however if the IVA creditors refuse to accept the proposed IVA then you should look seriously at bankruptcy.

Impartial Debt Advice

I-V-A.org.uk is part of a group of Licensed Insolvency Practitioners who are legally able to prepare and manage your IVA from start to finish. As part of our service we are able to provide you with free impartial debt advice to help you find the best solution to your debt problems. To speak to one of our advisors simply call us on freephone 0800 054 50 43 or alternatively complete our enquiry form.