Advantages and Disadvantages

Advantages of an IVA

• You avoid being made Bankrupt and all the unpleasant stigma and restrictions imposed on you through the Bankruptcy process

• All of your unsecured creditors are bound by the IVA – meaning they are no longer able to chase for payment, threaten legal action, charge you penalties or interest on the debts owed

• If you do what you agree to do and comply with the terms of the Proposal you will be debt free on completion of your IVA

• You pay an affordable amount back to your creditors whilst being able to get on with your life

• Your home will not be sold – however you may have to re-mortgage to release your share of any equity in your home

• You will have a point of contact at DebtChampion who will always be available to answer your queries and deal with any concerns you may have throughout the IVA process

• The costs are paid from your monthly income contributions (not in addition to) and are typically a lot less than the costs of Bankruptcy meaning that your creditors should receive a better return

Disadvantages of an IVA

• Your Proposal must be attractive enough for your creditors to approve the IVA – this must show a better return than if your creditors were to make you Bankrupt

• IVA terms are typically 5 years in duration and you will be required to make monthly payments throughout – Bankruptcy is a quicker process however all your assets would vest in a Trustee in Bankruptcy to be realised for your creditors

• Your IVA Proposal is a legally binding agreement meaning you must comply with its terms – if you don’t then your IVA will fail

• For the term of your IVA your disposable income will be used to pay into your IVA to repay your creditors, you will therefore have a strict budget for the duration of your IVA

• The Insolvency Service keeps a public register of people in an IVA

• There is a cost to be paid to the Supervisor for dealing with your IVA – although this will be factored into the agreed monthly income contributions which you pay