Image: Andre Taissin on Unsplash

Debts – all have them, and we need to know how to deal with them without stressing out. If you are dealing with a debt situation, you ought to know the best solution regarding the repayment of the sum that you owe. If you don’t address the situation wisely and calculatingly, the repayment will even be more complicated than it is now.

Have you heard about IVA before and thought about what is an IVA? Let us tell you that you have landed at the right spot. Opting for an IVA might be just your way out of the misery generated by your debts. However, as with any other potential debt solution, there is a set of pros and cons coming with it, and the IVA is no exception.

This article will help you get a general idea about what an IVA is, how it works, how you can potentially benefit from it, and the potential risks associated with the IVA. After reading the potential advantages and disadvantages of IVA, you will have a better idea about whether this debt repayment is right for you or whether you ought to look out for other potential options.

The Potential Benefits of IVA

If you have problems with debt, you might find the ultimate solution with IVA. The potential benefits of an IVA include the following aspects:

  • You can set a percentage to pay back the debt. While paying your debt back using the IVA agreement, the amount is generally higher than the amount that creditors typically receive during bankruptcy.
  • With the given period, which can go up to five and six years, you will be declared debt-free and get on with your life happily.
  • Another potential benefit of IVA is that your creditors cannot call you and demand more money than what has been originally agreed with the agreement of IVA since it is legally binding.
  • This means that your creditors can no longer contact you, demand payment, or instigate legal action once the payment of your debt has been completed.
  • The IVA is affordable – depending on your monthly income, you can opt for easy monthly payments. The monthly amount depends on your monthly income. Thus, it will be an amount that you can easily agree to each month.
  • Another essential benefit of an IVA is that you don’t have to sell your house or other property. However, depending on circumstances, you might be required to free up some equity and remortgage for the unsecured conditions.

The Potential Disadvantages of IVA

As with other debt payment solutions, this solution has some disadvantages as well, including the following:

  • Your creditors might not agree to an IVA.
  • Since an IVA is a formal and legal agreement, you will be required to obey and follow the terms and conditions. Even though the monthly installments are affordable, they might cast some pressure on your tight monthly budget.
  • An IVA also affects one’s credit score and is usually recorded in the public register as well.