Disadvantages of IVAs

While IVAs are often the best solution to help get you debt free, the following should also be noted when considering taking out an IVA.

Individual Voluntary Arrangements are reviewed annually and financial statements from the debtor are required.

IVAs have strict payment terms although there can be some flexibility in extreme circumstances where situations have changed.

Once the IVA begins, the debtor must not take out any credit agreements. It is seen as a serious breach of the IVA if they do so, and the Individual Voluntary Arrangement could be failed by the insolvency practitioner.

The IVA will be noted on the credit file of the debtor, and will stay there until the IVA has finished. Only when the Individual Voluntary Arrangement (IVA) is completed will the debtor be able to improve their credit rating score.

As an IVA is a Formal Agreement the debtor will be legally bound to comply with its terms. Once set up, if the debtor fails to comply with its terms, creditors would have the option to make the debtor bankrupt.

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