Getting a loan involves a risk of not being able to pay up due to unfavorable circumstances. When this happens, what are your choices? For many entrepreneurs, filing for bankruptcy is the last resort. If you want to put up a good fight, getting an Individual Voluntary Arrangement (IVA) may be just the solution you’re looking for.
IVA is an insolvency agreement that both you and your creditor would agree to. In this agreement, your creditors would agree to a monthly payment for a fixed period, usually five years. You only have to pay what you can afford. Your creditors will then freeze interest, write off the balance of unpaid debts, and stop impending legal actions, which are some of the best IVA benefits.
Before you decide to get an individual voluntary agreement, you first need to know the pros and cons of IVA and how to include your business loan in your IVA.
Pros and Cons of IVA
Knowing the pros and cons of Individual Voluntary Arrangement will help you make an informed decision. Your debt repayment managers will discuss these in greater detail.
– The interest of your debt will be frozen from the start of your IVA, so your debt level will not increase.
– You can say goodbye to creditors constantly calling you. Once they agree on an Individual Voluntary Arrangement, they are legally required to cease contacts demanding for payment.
– Repayments are based on what you can afford.
– Your creditors would have to agree to an IVA, so there’s no guarantee that your application will be approved.
– Even though the monthly payments are based on what you can afford considering your income, this may mean a tight budget during the duration of the term.
– IVAs will affect your credit score and will show up on your record for six years.
– IVAs are also listed on the Individual Insolvency Service register.
– There will be compensation fees to the IVA company.
Knowing the unique pros and cons of IVA, you will be in a better position to assess if you will benefit from this payment method. Would the advantages outweigh the disadvantages?
How to Include Your Business Loan in Your IVA
Before you go and hire the services of an insolvency company, you first need to know what type of IVA you should put your business into. The legal arrangements of your business dictate this.
If you are a Sole Trader, every personal unsecured debt that you have such as business loans, credit card debts, and overdrafts should be included in your IVAs.
Partnerships, Limited Company, and Limited Liability Partnership Debts are included in IVA differently. IVA Benefits are different for each business type.
Consult Insolvency Practitioners for More About IVA Benefits
IVAs can seem like the perfect way out of an impossible situation, but before you apply for one, make sure to first consult insolvency practitioners for more advice on the IVA benefits and downsides, policies, regulations, and other considerations.
Once you feel well-informed about the different aspects of IVAs, then it’s time to take charge and control your financial situation with an IVA.