An IVA could be a redeeming feature for somebody who is on the verge of bankruptcy.
Nonetheless, it carries its own set of disadvantages.
It may take you out from your financial crisis for the time being, but may affect badly on your future.
An IVA is a formal contract between the debtor and the creditor.
You as a debtor are bound by law to pay the agreed sum of money in installments from your salary.
If for some reason, you lose your job, or are unable to pay the dues within the timeframe, then the contract will annul automatically.
This will take you back to square one.
You shall not have only lost the amount, which you have already paid, but will be bankrupted by the creditors.
To crown it all, the IVA cost shall be added to your overall debt.
In this way, you shall never be able to come out of your financial crisis.
IVAs are at least made for 5 years.
By being stuck with the rigid payment schedule, you cannot undertake another business or a better job, due to the risk factors that are involved.
Most IVAs are reviewed annually, and you are supposed to comply with it.
Even a small raise in the installments can make a huge difference to your already constraint resources.
If you work overtime, or start earning more, you shall be obliged by a clause in the IVA to contribute half of your additional income to the IVA payments.
You shall not be allowed during the time of the IVA contract to apply for credit card loans, or loans of other kinds like house loans, business loans etcetera.
If you do so, this will be considered as a serious breach of law, which may result in a legal action against you by the creditors, who signed your IVA.
This is indeed a big drawback of having an IVA, because one is not allowed to make any type of decision regarding his/her future.
If you have to hold back many critical decisions regarding your future, then this may have far-reaching adverse effects on your life.
Your credit rating score shall be withheld until and unless you do not clear all the dues as stated in your IVA.
Even after paying back all the dues, you shall never be sure if you are cleared for future credit applications.
Your credit file shall contain all your previous information and your future prospects shall always be affected by it.
You risk all you property and assets at the disposal of your creditors.
In addition to it, you have to pay a hefty sum to the Insolvency Practitioner, who closely follows your financial transactions.
Due to all these drawbacks, one may opt for bankruptcy.
However, the social stigma attached to it cannot be borne by anyone.
According to the latest bankruptcy laws, the repayment payment period has been decreased to 12 to 36 months.
This means that one can come out of bankruptcy rather earlier, than from an IVA, which takes around 60 long months.
Nonetheless, it carries its own set of disadvantages.
It may take you out from your financial crisis for the time being, but may affect badly on your future.
An IVA is a formal contract between the debtor and the creditor.
You as a debtor are bound by law to pay the agreed sum of money in installments from your salary.
If for some reason, you lose your job, or are unable to pay the dues within the timeframe, then the contract will annul automatically.
This will take you back to square one.
You shall not have only lost the amount, which you have already paid, but will be bankrupted by the creditors.
To crown it all, the IVA cost shall be added to your overall debt.
In this way, you shall never be able to come out of your financial crisis.
IVAs are at least made for 5 years.
By being stuck with the rigid payment schedule, you cannot undertake another business or a better job, due to the risk factors that are involved.
Most IVAs are reviewed annually, and you are supposed to comply with it.
Even a small raise in the installments can make a huge difference to your already constraint resources.
If you work overtime, or start earning more, you shall be obliged by a clause in the IVA to contribute half of your additional income to the IVA payments.
You shall not be allowed during the time of the IVA contract to apply for credit card loans, or loans of other kinds like house loans, business loans etcetera.
If you do so, this will be considered as a serious breach of law, which may result in a legal action against you by the creditors, who signed your IVA.
This is indeed a big drawback of having an IVA, because one is not allowed to make any type of decision regarding his/her future.
If you have to hold back many critical decisions regarding your future, then this may have far-reaching adverse effects on your life.
Your credit rating score shall be withheld until and unless you do not clear all the dues as stated in your IVA.
Even after paying back all the dues, you shall never be sure if you are cleared for future credit applications.
Your credit file shall contain all your previous information and your future prospects shall always be affected by it.
You risk all you property and assets at the disposal of your creditors.
In addition to it, you have to pay a hefty sum to the Insolvency Practitioner, who closely follows your financial transactions.
Due to all these drawbacks, one may opt for bankruptcy.
However, the social stigma attached to it cannot be borne by anyone.
According to the latest bankruptcy laws, the repayment payment period has been decreased to 12 to 36 months.
This means that one can come out of bankruptcy rather earlier, than from an IVA, which takes around 60 long months.