If you are facing massive debts and cannot afford to make regular monthly repayments, an ecured loan IVA is a viable option. This type of debt management plan combines your secured debts with unsecured ones, enabling you to make payments on both types of debts at the same time. But this type of loan does not come with priority debt protection. While this means a lower interest rate, it is not recommended for large debts and is not recommended for people who own their home.
An Individual Voluntary Arrangement is a government-backed debt solution that allows you to pay a manageable amount of your debts. If your debt is too large for an IVA, you can consider selling your home to pay off your debts. If you have equity in your home, you can even sell the property to cover the debts. This solution can be particularly helpful if you have to sell your home in order to raise the funds.
However, if you are unable to pay off a large amount of debts with an IVA, you might be better off with a different type of debt management plan. Secured loans, such as a mortgage, are not usually restructured, and can be difficult to pay off. Unlike unsecured loans, secured debts cannot be repossessed. However, falling behind on them will damage your credit rating and cause other financial problems.
In order to get an IVA, creditors must vote in favour of your proposal. If they do not accept your proposal, you can still use a different approach by approaching other creditors or seeking out a specialist debt management plan. The IVA advisor will review all of your debts and let you know which loans are higher priority. A good IVA advisor can also negotiate with your creditors to get their interest rates reduced. If you have multiple loans, a skilled IVA can help you to clear them without filing for bankruptcy.
The downside of an IVA is that it is recorded on your credit history for six years. This means that you may struggle to access credit options in the future. However, your credit rating may not fall as badly as you think. If you do manage to get an early settlement of your IVA, you will have to pay back the loan. If your offer is reasonable, your IP will likely arrange a variation meeting with you. Variation meetings are usually proposed when there are changes in the original terms of the arrangement.
When choosing an IVA, you should consider the amount of equity you have in your property. This is important because your equity will help the creditors understand the value of your home. However, if you have equity in your home, an IVA is not the best option. You will have to sell your home if your debts exceed your assets. In order to be eligible for an IVA, you must have more than £2,000 in debt and be unable to make your monthly payments as agreed.