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Disadvantages of an IVA

While the advantages outweigh the disadvantages, there are some disadvantages to consider if you’re thinking about entering into an IVA:

  • If you are a homeowner and there is equity in your property (or if you have other assets of significant value), the IVA agreement may require you to release some or all of it, after 3 years for the benefit of the creditors.
  • If your total unsecured borrowing is less than £5,000 you will be unable to enter into an IVA. You will also be able to afford a minimum monthly payment of £100. However rescheduling your debts may impair your credit record and is likely to increase the overall sum to be repaid.
  • You will not be able to use credit cards or store cards while you are in an IVA. You will not be able to borrow any more money until the IVA comes to an end, though you may be able to change an existing mortgage or take out a new one.

If you fail to meet the terms of the IVA, you still run the risk of being made bankrupt.


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