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Frequently asked questions about IVAs

What is an IVA?

IVA is an acronym for “Individual Voluntary Agreement”. An IVA is best suited for people who are finding it hard to make their monthly payments. It is an agreement between you and your creditor by which you agree to pay reduced monthly payments of the debt you owe. An IVA makes it easier not to have to deal with legal letters and phone calls from your creditor.

Benefits of an IVA

As soon as an IVA is signed, the creditor can no longer charge you further rates and interest on your debt. An IVA also wipes out up to 80% out of your existing debt and makes it possible to make a single payment every month regardless of how many creditors you may have. This payment will be more affordable that the previous one and you will be free of debt at the end of the period specified in the IVA.

Does an IVA affect my credit rating?

You will not be able to take out further unsecured loans after you have signed an IVA, until the period specified in the IVA and an additional year have passed. An alert will be appended to your credit file notifying lenders that you are currently honoring an IVA so they will know not to lend you further. After the IVA ends and the last year starts, you might be able to get further loans but lenders will probably ask you for higher charges and a higher interest rate.

Am I eligible for an IVA?

If you owe more than £15.000 to at least three companies and you are living in England, Wales or the Northern part of Ireland you can apply for an IVA. You also have to prove you are currently struggling to make payments and that you have an income that could sustain lower payments.

What if I can’t pay after I signed an IVA?

Breaching your agreement might lead to bankruptcy. You will have to try and do your best to make your payments every month. The alternative is to consult with an insolvency firm and tell them about your case.

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