When considering an IVA, it is wise to talk to an IP or independent professional before applying for a loan. The IP can then talk with your creditors and determine whether or not an IVA is right for you. It is also important to be honest and up front about your financial situation when applying for the loan. An IVA will normally last for 30 months, and for it to be successful, 75 percent of your creditors must agree.
If you have equity in your property, it is possible to apply for an ecured loan through your IVA. However, it is important to remember that most creditors will not approve an application for an IVA if you have debts greater than the value of your property. If you are not able to pay back the loan, you may be required to refinance the loan.
Before applying for an IVA, you must make sure you have exhausted all other options. While you can include as many debts as you can afford, it is usually recommended that you have at least three or four debts with more than two lenders. It is also important to consider whether you can continue making the minimum payments for five years. If you are unable to repay your debts after that time, you might find yourself in a position where you are forced to file for bankruptcy.
An individual can file for bankruptcy if their debt is greater than £25k. In such a situation, an IVA advisor can help you avoid this by examining your debts and helping you decide which loans are priority. An IVA advisor will be able to negotiate with your lenders and find the best way for you to pay them off.
An IVA is a great way to avoid bankruptcy and to regain control of your finances. When it is successful, you can expect creditors to accept the repayments in a more manageable way. It is important to note, however, that an IVA will have a negative impact on your credit history for the next six years.
If you have equity in your property, you can use it as security for an IVA loan. However, this method will cost you a lot of money. Therefore, if you have very little equity in your home, you may want to consider using a bank overdraft instead. In either case, it is important to consult your IP before taking out a new loan as doing so could jeopardise your IVA and lead to legal action.
While IVAs can also be used in situations where the home is the only security you have against unsecured creditors, you should still be aware that it is important to have a fair deal with your creditors. The current financial climate makes it difficult to get a mortgage or secured loan. In such circumstances, you may want to consider an IVA if you have more than PS10,000 in equity in your home.