Individual Voluntary Arrangements make it possible for a debtor to become debt-free in five years if he makes his monthly payments on time. At the conclusion of this period, his credit score will likely improve.
Since IVAs are private agreements between the debtor and creditors, they are not associated with negative publicity. Therefore, a debtor's reputation is not at risk if he enters into these agreements. A person can locate him on the insolvency registry, however, if they conduct a search.
Once a person has entered into Individual Voluntary Arrangements, he is no longer subject to phone calls or letters from his creditors. In addition, neither interest nor late payment fees may be assessed on any outstanding balances.
The greatest benefit of IVAs is that they protect the debtor from the possibility of bankruptcy as long as he continues to make the agreed-upon payments.
A disadvantage of Individual Voluntary Arrangements is that the debtor must owe a minimum of £15,000 to three separate creditors in order to qualify for this program.
In the event that the debtor is unable to make his monthly payments, the Insolvency Practitioner is required by law to inform the debtor's creditors of any available equity, which could be used to satisfy their debts after bankruptcy is declared.
Even though the debtor's outstanding balances are written off at the conclusion of the Individual Voluntary Arrangements period and his credit rating improves, he will have difficulty obtaining credit for the next five years. In addition, he will be unable to obtain unsecured loans during the duration of the arrangements, and his credit cards may be canceled to prevent overspending and ensure that creditors are paid.
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