The Individual Voluntary Agreement (IVA) was devised to aid those individuals with debt problems but whom perhaps don’t quite need to succumb to the last resort of bankruptcy. An IVA is basically an agreement between the individual and his creditors. Even though it is not as troublesome a move as bankruptcy, there are still things you need to consider before committing yourself fully.
One advantage is that the applicant’s situation is be kept out of the public domain. Bankruptcy is often a source of news for the press but this would not be the case with an IVA. Yes, creditors would still see someone with an IVA as a risk because it is visible on your credit report; the agreement is between the individual and their respective creditors and is of no concern to anyone else.
An IVA, as with a bankruptcy, does appear on a credit report but therein still lies an advantage in that any prospective creditor can see that there is a willingness to pay back any monies owed. With bankruptcy, the individual has made a formal declaration that the debt cannot be paid.
A rather important advantage that an IVA has over bankruptcy is that the borrower is still in control over their home. If declared bankrupt, they lose that control and they can even find that their home is sold to pay monies owed to their creditors.
A sizeable disadvantage is one that was touched upon in that the IVA will appear on the individual’s credit report. Though, only for a short period. It is a point to note, however, that if your financial situation is so tough that you are applying for an IVA, your credit score won’t exactly be one to write home about. It will already be shown to be stained and if your inability to make payments continues, so will its level of deterioration and it will cause your chances of obtaining credit to decline rapidly. So perhaps that disadvantage would not necessarily be any worse than avoiding this route altogether.
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