IVA (Individual Voluntary Arrangement) is an option to bankruptcy. In this, an agreement is reached between the lender and borrower to pay back the debt within five years in periodic installments. It is a solution proposed by the government itself after the Insolvency Act, 1986.
There are some advantages of Individual Voluntary Arrangements, especially when compared to bankruptcy. As illustrated on Creditfix – Individual voluntary arrangement, an IVA is vital for debt settlement. Below are some of its benefits.
Benefits of IVA
No work restriction
There is no restriction on where you work and in what capacity when you opt for an IVA, unlike bankruptcy, where you are deprived of working in several positions and armed forces. In an IVA, you can continue in your present line of work even while you pay back your debts. Unless mentioned in the contract, you are usually not liable to tell even your employer about being in an IVA.
It is a private affair
An IVA arrangement is a private affair between you and the creditor. It does not attract the same publicity as a case of bankruptcy does. It is not advertised in the newspaper, and nobody knows unless you choose to tell them yourself.
You can quickly pay off all your debt within five years
You can pay off your debt earlier than this if you can come up with a lump sum payment. After this period, you are not only debt free but also free to do anything you want. Unlike after a bankruptcy, you are not prohibited from starting a new business after paying off your debts through an IVA, although some creditors may choose to extend credit under a much higher interest rate.
You pay less than the original amount
With an IVA, you usually end up paying less than the original price. After you have paid up your debt, the creditors can no longer approach you with any demands or conditions. It is advisable not to propose any less than 25% of the original debt value, or the IVA may be rejected.
You liquidate when you want
You are not compelled to sell your house or other property, unlike with bankruptcy. However, you may want to liquidate some of your assets to pay off your debts, but that is entirely your choice.
No harassment from creditors
The creditors cannot harass you or demand money by any other means if you are paying them through an IVA and you are rigorously following its terms and rules. However, defaulting on your payments may give the creditors the right to demand money in any way they deem right.