Before you take out an IVA, make sure that you weigh up all of the IVA Pros and Cons to ensure that an IVA is the best option for you.

Here are some of the most important pros and cons of taking out an IVA:

IVA Pros (Advantages)

Your creditors are not allowed to contact you

Once you’re in an IVA your creditors cannot communicate with you again unless it is through your Insolvency Practitioner (IP). Even while you are setting up your IVA, they must deal with your IP because you are protected by an Interim Order granted by the county courts. All interest and charges are frozen

From the time your IVA is agreed with your creditors all the interest and charges won’t be applied (as long as you keep up the repayments) so you don’t need to worry about your debts spiralling out of control any more. Debt free in 60 months

Unlike normal debt which can grind on for years on end, the debt within an IVA will be paid back at a rate you can afford and any remaining debt at the end of the IVA will be written off. In some cases, this can be as much as 70% of your debt. No more struggling to make payments every month

Under the IVA you make one fixed monthly payment to your IP and it is based on what you can afford after your living expenses have been met. You won’t have to make a decision between paying creditors and heating your home or reducing the amount you spend on food to a bare minimum. You will have enough to live, although not to be extravagant. Keep your home

Having to leave your home and move into rented accommodation is one of the greatest fears most debtors have, and is often why they put off dealing with their debts. However, you won’t have to sell your home if you have an IVA, although at the end of the term your IP may ask for your home to be revalued to see if there is a suitable amount of equity in it that could be released. Keep your job

If you have a job contract with clauses forbidding you from declaring bankruptcy, an IVA is an alternative that will allow you to deal with your debt and keep your job. Carry on trading if you run a business

IVA’s were originally set up to help business people, so they are perfect for helping ring-fence and pay off debt while still trading. And of course, if you have staff you can keep them on the payroll rather than having to make them redundant if you went into administration.

IVA Cons (Disadvantages)

Like with everything in life, there is a downside! Here are some of the risks of an IVA: