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Disadvantages of an IVA

  • Usually only suitable if the debtor has unsecured debts of at least £5,000, with a minimum disposable income of £70 after all essential living costs are covered.
  • To gain approval, creditors representing at least 75% of the value of the money owed, as well as a simple majority, must agree to the proposed arrangement.
  • You will be required to stick to a financial budget for the term of the arrangement (usually five years).
  • All assets and liabilities must be declared, if you own assets of excessive value, the creditors can ask that they be released for the benefit of the unsecured creditors. Any windfalls, inheritance or bonuses must be declared to the Supervisor of the arrangement (your Insolvency Practitioner).
  • All IVAs are recorded on a public register and will appear on your credit file. This could affect any future applications for credit.
  • In some cases it may be necessary to release some of the equity from your property in the 4th year of the arrangement.
  • An IVA is a legally binding agreement.
  • Your credit rating will be adversely affected throughout your IVA, and usually, for an additional year after completion.
  • Your Insolvency Practitioner will need to conduct an annual review of your financial situation. If you can afford to increase your payments into your IVA you are legally bound to do so.
  • If you fail to make payments into your IVA it may result in your unsecured creditors looking to petition you for Bankruptcy.

Click here to see some of the advantages of and IVA.

If you would be interested in enquiring about an Individual Voluntary Arrangement (IVA) or would like to talk about any other financial options, call FREE on 0808 22 22 123 or alternatively you can request a callback on the contact page.

We offer impartial advice and will make you aware of all applicable financial solutions based on your individual financial circumstances. We will also make you fully aware of the potential costs, implications, advantages and disadvantages involved in any proposed financial solution.

All IVA's offered by 123 Debt Solutions Ltd will be administered by Pareto Money Management Ltd or a trusted third party.

Pareto Money Management Ltd is authorised by the Insolvency Practitioners Association and is a member of the Association of Business Recovery Professionals, known as R3.