An IVA should never be sold as a route to writing of debt or an easy debt solution to enter because the consequences can be extreme if it’s wrongly entered.
An IVA is short for individual voluntary arrangement and is a debt solution which helps people repay a percentage of their debt over 5 years. Any debt remaining at the end of the 5 years will be written off along with interest and charges.
Consequences of Entering IVA
There are a number of consequences someone may face if they are wrongly entered into an IVA, it’s important these are considered first.
- Addition Income: Any additional income someone earns while in an IVA must be at least partially paid towards the debt. For example any overtime will mean 50% of the additional income will go into the IVA
- Inheritance: If someone in an individual voluntary arrangement receives inheritance it must be paid towards the debt. This could mean someone repays the full debt and any fees for running the debt solution.
- Assets: Some assets will be protected in the IVA however any assets deemed to be unnecessary, such as an addition property not being let out, could be lost. This could mean the person in the solution is forced to sell the property and any proceeds paid into the IVA.
Where To Get IVA Advice
Any organisation who offers debt advice should have a consumer credit licence which permits them to give IVA advice and this should be on their website.
Avoiding Bad IVA Advice
Always check an organisation have a consumer credit licence, a good reputation and outline exactly what they offer before any advice is received.
If a company do not show their consumer credit licence on their website or clearly state where they are based it’s best to take extra steps before contacting them.
A simple Google search will usually bring up a list of complaints against organisations who have offered bad advice in the past.