What impact will an IVA have on my life?
Entering into an IVA (Individual Voluntary Arrangement) could be an option if you’re faced with unsecured debts that you can’t afford to repay. It’s an alternative to bankruptcy that enables you to repay as much of your unsecured debts as possible over an agreed period, before writing off the rest.
There’s more information on the ins and outs of an IVA here. In the meantime, here’s a look at how an IVA could affect you.
Impact on your finances
Although a lot of people enter into an IVA to avoid the consequences of bankruptcy, IVAs do actually share many of the same downsides. Most notably, your credit rating will be affected, and records will remain on your credit history for six years after the starting date.
Although repossession isn’t a risk with an IVA, if you are a homeowner you may still be made to release some of the equity in your home as part of the agreement.
Also remember that during your IVA, you’ll be expected to repay as much as you can every month, so that you can repay as much as possible over the agreed repayment period. This will leave you with very little money for anything other than essential expenses until your IVA has completed.
Employment opportunities
Some people are concerned about whether their career could be affected by entering into an IVA. Thankfully, an IVA is far less likely to affect your employment opportunities than bankruptcy.
Bankruptcy will prevent you from getting a job as a barrister, accountant, MP, Local Authority Official, Judge, policeman or any role in an FSA-accredited company, amongst other things. An IVA doesn’t have the same impact, although some employers may ask you to declare if you have become insolvent in the past, which could possibly affect your chances of being employed by that particular company.