Could you escape from debt with an IVA?

If you’re trying to move out of the red and into the black but have so far struggled to manage making repayments and actually living, then it might be time to consider other options. An IVA could see you debt-free within five years; it is an effective way of managing your debts, freezing the unnecessary interest and charges they accrue, and putting yourself on the path to debt recovery.

One of the greatest advantages of an IVA plan is that it freezes all your debts, which means no interest or additional charges can be added to it while you make the final payments. You are entered into a legally binding contract with your creditors who will work closely with your debt representative and agree to a repayment plan that benefits both of you. It also means you will no longer receive threats or harassing calls from creditors – you can simply pay back what you owe without any worries.

An IVA is not the same as bankruptcy, yes it does impact your credit score and you will be placed on a public register (although this is mainly only used by credit agencies) but it could be an effective solution to your debt problems.

Your creditors must agree to an IVA, and as long as 75% of these say yes it will be approved. It’s important to note that you may have to remortgage your home, in order to release equity that will be used to clear some of your debt and it could take up to five years to complete your repayments, but this is definitely worth considering if you are struggling to meet those minimum monthly repayments.

An IVA consolidates your debt into one manageable monthly repayment which means you can focus on budgeting to ensure the amount agreed is always available. However, it’s important you consider your options carefully. An IVA is usually recommended if you have debts of £7,000 or more and are unable to make the minimum payments.

An IVA may also be the best solution because setting one up wipes off a considerable amount of your debt. In some cases, this could be around 70%! Which means you will only be paying a small percentage of your debt off over the repayment period and all without threatening phone calls and sleepless nights.

You’ll also be pleased to discover that a whole host of debts can be included within an IVA, such as: credit cards, bank and building society overdraft fees, store cards and personal loans. Knowing that all your debts could be covered by such a solution is comforting, it means that you can consolidate everything you owe and ensure you aren’t left being chased or harassed for money once the process is over.

An IVA guarantees that once the repayments are complete the money you owe is with those who need it and you are able to move on with your life. You should also receive a certificate confirming the process is over and the balance has been written off once payments are complete, giving you peace of mind!

If you are struggling to get out of debt, an IVA could be the best solution for you – however, it is always recommended that you speak to a qualified debt adviser first.

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