If you are considering an Individual Voluntary Arrangement then you should be aware of the pros and cons. Personal insolvency isn’t something that you should enter into lightly and so you should always consider the implications of the positive results and negative possible repercussions.

An IVA will show your creditors that you are taking control of your debt and intend to pay it back. You will agree to legally binding terms stating how and when the payments will be made and for how much.

This article will give you a good insight on what you can expect when taking out an IVA.

The Pros of an IVA

• An IVA will leave you with no debts

• Taking an IVA can prevent you from losing your home

• You can still have a current account, although you will not be permitted to have an overdraft

• An IVA can render you debt free in 5 years

• You can write off up to three quarters off your debt

• An IVA only requires you to pay what you can afford back

• Stop creditors from contacting you

• Protect yourself from court action

• Creditors will have to stop making demands if you take out an IVA

• Unlike bankruptcy, and IVA means that you don’t need to have your name listed in a local paper – your IVA is your business

• An IVA will allow business owners to continue trading

• An IVA gives you more flexibility as to which assets, creditors have access to

• Larger dividends can be given to creditors

• Unlike bankruptcy, you can remain in your job and if you are a company director, you can remain within this role

• You can also maintain public office positions if you take out an IVA

• An IVA costs less than a bankruptcy

• You can keep all your assets with an IVA - so your home is not at risk

• IVAs are in fact preferred by creditors because they can claim back tax relief against these bad debts

• IVAs actually bind creditors even if they vote against the IVA

• An IVA gives you the freedom to manage your debt, your way.

The Cons of an IVA

• An IVA can last up to 5 years, bankruptcy only lasts 1 year

• Although your IVA is not broadcast, they are recorded in a publicly available register (Individual Insolvency Register)

• You MUST include all creditors. If you leave any out, then they could come after you.

• With an IVA, the more you earn, the more you have to pay

• In rare cases an IVA can last an additional year on top of the 5

• If you owe quite a large sum, then it may mean that you have to release some of the equity in your property

• You must owe at least £15,000 to at least three creditors.

• An IVA will require you to pay at least £200 every month

• An IVA can be a great deal, but you are locked in

• Taking out an IVA will prevent further unsecure borrowing

• An IVA will show up on your credit report for up to 6 years

• You will end up paying back more than your IVA amount

• You will have to pay back 75% of the total debt value

• If you fail to pay back your IVA, then you will be declared bankrupt

• You cannot be confident that your home won’t become collateral damage if you don’t pay back your creditors.

• IVAs are legally binding and therefore if you mislead or lie then that is a criminal and jailable offence

If you are interested in taking out an IVA, then you need to speak to an insolvency practitioner. Each personal insolvency case is not the same and therefore should be judged on an individual basis. Speaking to an insolvency practitioner will mean that you can get an idea of exactly what is right for you and your circumstances.