MoneyNerd’s founder, Scott Nelson, has a decade of financial industry experience, including 6 years in FCA regulated loan and credit card companies. Troubled by a lack of conscience in the industry, he founded MoneyNerd to give genuine advice to those in debt and struggling financially.
Janine Marsh is an award-winning presenter and a valuable member of the MoneyNerd team. With a wealth of experience as a financial expert, she's been featured on BBC Radio 4, BBC Local Radio, and BBC Five Live, and is a regular on Co-op Radio.
Could you legally write off some debt? Answer below to get started.
For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.
For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.
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For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.
If you’re worried about debt and thinking about an Individual Voluntary Arrangement (IVA), this guide is just for you. We’re here to help you learn more about the potential negatives of an IVA.
Every month, over 170,000 people visit our website for advice on debt help. We know you might be feeling confused about the IVA process and anxious about paying off a debt. But don’t worry; you’re not alone.
In this guide, we’ll help you understand:
Both the good and bad sides of an IVA.
How an IVA might change your life.
If an IVA will affect you forever.
If an IVA is a good choice for you.
Our team is full of people who have dealt with debt problems before. We understand how hard it can be – we’re here to help make things clearer every step of the way and answer all your questions so you can make the best possible choice.
Let’s dive in.
How does an IVA affect your life?
Having an IVA could impact aspects of your life, including your job, current assets and your future income and assets. You’ll also find it more difficult to get approved for credit during your IVA because your credit score will be negatively affected, and you will need permission from your IP to apply for credit above £500.
You might not be able to continue in some legal or finance positions once you have an IVA, or you may need to work under restrictions. Your current assets may be sold as part of the IVA agreement and any future income or assets you receive may need to be paid into the IVA. The latter includes things like a pay rise or money from a property or car sale.
Does an IVA affect you forever?
An IVA does not have to affect your life forever and the restrictions placed on you will be lifted once the IVA has ended. However, it may take time to build your credit score back up and get approved for credit in the future.
The IVA will stay on your credit file for six years from the date it started. If you finish your IVA earlier it will remain on your credit report for the full six years but should be marked as ‘completed’. Your IVA is also recorded on the Individual Insolvency Register until three months after it has been finalised.
Is an IVA worth doing?
An IVA may be the most appropriate and advantageous debt solution for some people, but for other people, there may be a more suitable debt solution. The only way to be sure if an IVA is worth doing is to receive debt advice, which can be accessed for free with UK debt charities.
Debt advice services will assess individual situations and circumstances to recommend the most suitable debt solutions available to you. These services are available over the phone and sometimes online through the charity website.
What are the pros and cons of an IVA?
What are the benefits of an IVA and what are the drawbacks? Below we have listed the most common positives and negatives of an IVA:
Positives of an IVA
The monthly repayment is easier to manage than multiple repayments and is based on personal finances, ensuring it is more affordable
You’ll be able to keep your property as long as you continue to make mortgage payments
You don’t have to pay fees before the IVA is approved and active
Fees payable to your IP are taken from your monthly payment – rather than an extra to pay
Once the IVA term ends, your remaining unsecured debts are written off
Negatives of an IVA
Your IVA is not guaranteed and creditors could reject the proposal
An IVA negatively affects your credit score and is recorded on the Individual Insolvency Register, a public register
Your personal spending is restricted during the IVA term and you’ll be subject to personal finance reviews to ensure you’re paying as much as you possibly can without entering financial hardship
Failing to repay an IVA as agreed can result in bankruptcy
If you have home equity you may be forced to borrow against it to repay more of the debt at the end of the IVA – or your IVA could be extended
Although the main advantages and disadvantages of an IVA are listed above, it is still essential that you receive debt advice before making a debt solution decision.
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MoneyNerd’s founder, Scott Nelson, has a decade of financial industry experience, including 6 years in FCA regulated loan and credit card companies. Troubled by a lack of conscience in the industry, he founded MoneyNerd to give genuine advice to those in debt and struggling financially.
Janine Marsh is an award-winning presenter and a valuable member of the MoneyNerd team. With a wealth of experience as a financial expert, she's been featured on BBC Radio 4, BBC Local Radio, and BBC Five Live, and is a regular on Co-op Radio.
Could you legally write off some debt? Answer below to get started.
For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.
