What Are The Benefits Of An IVA?
If you are looking at what your options are with your current bills and debts, at some point we all think of bankruptcy; just going bankrupt and being done with it all.
Of course by going bankrupt there are implications of doing this and bankruptcy is not the best option for everyone, especially if you own property or have other assets.
In bankruptcy any assets you have such as a house, or in many instances a car, will be looked at and possibly taken/liquidated for the bankruptcy.
In an IVA you are allowed to keep your property, and if there is equity in the property, you would release a portion of this equity in the 5th and final year of the IVA.
If you have equity in a property and go bankrupt, unless you or someone can raise the money to pay the Receiver/Trustee, you could very well lose the house. And since you are considering bankruptcy, it is doubtful you could raise any large sums of cash to pay the Trustee.
So an IVA preserves the property, a good thing.
Also, with the changes in how payments are calculated to pay into a bankruptcy, it does make an IVA a bit more attractive.
The Insolvency Service now states that any surplus income you may have that exceeds £20, will be taken for a period of three (3) years to be paid into the bankruptcy.
This does not leave much room for any emergencies or surprise expenses.
Another consideration for some people is their jobs; if they were to go bankrupt they could lose their job, however an IVA may be allowed and not impact their job.
Most of the people who this would impact would be in banking, mortgage brokers, or the finance sector.
And while there are many benefits to entering into an IVA, for some people it is the moral or ethical thing to do; you want to repay your debts, but need them restructured in a way that is more affordable. An IVA can do this for you.