| Money worries are not just a short-term problem and | | | | This is usually based on how much you owe and how |
| if you are among the thousands of people who are | | | | much you can afford to repay each month. |
| struggling to make repayments on debts, then you | | | | In terms of your credit rating, taking out an IVA may |
| might be considering entering into an Individual | | | | not be as detrimental as you may think. |
| Voluntary Arrangement (IVA). | | | | One of the conditions of entering into an IVA is that |
| As well as dealing with your current debts, you will | | | | you are not allowed to take out any unsecured debts |
| probably also be thinking about how an IVA can affect | | | | during the course of the arrangement. These include |
| your credit rating in the future. While this is a legitimate | | | | personal loans and credit cards. But, because the plan |
| concern to have, you may find that taking out an IVA | | | | will run for a minimum of five years, this means that |
| creates fewer problems when trying to obtain credit in | | | | very few organisations will have any need to review |
| the future than you might have thought. | | | | your credit rating anyway. |
| IVAs are an effective way to manage - and ultimately | | | | However, your IVA has to stay on your credit file for |
| clear - your debts if they are getting out of control and | | | | a minimum of six years from the date that you start |
| you are struggling to make regular repayments. In | | | | the IVA, which means that once you have |
| simple terms, an IVA is a formal agreement between | | | | successfully cleared your debts, there will be a further |
| you (the debtor) and your creditors, which sets out a | | | | 12 months where potential creditors can see the |
| structured payment plan to repay some or all of your | | | | arrangement on your file. On completion of your IVA, |
| debts. | | | | you will be sent a certificate to prove that the |
| A licensed insolvency practitioner will need to set up | | | | agreement was met. This must be forwarded on to |
| the IVA and will also advise you about repayments | | | | credit reference agencies, which can then update your |
| based on your financial situation. | | | | file accordingly. |
| Once you decide to take out an IVA, your adviser will | | | | You might find that in the year following the end of |
| put together a proposed repayment schedule. After | | | | your IVA, you struggle to take out an unsecured loan |
| you agree to it, the document will then be sent to your | | | | or credit card. Financial institutions may view you as |
| creditors and at least 75 per cent of them must also | | | | too much of a risk to lend to in this way. |
| agree to the IVA. | | | | Another thing to be aware of is that lenders may offer |
| Depending on your situation, an IVA can make | | | | you loans or credit cards but these will carry higher |
| provisions for you to pay back all or just some of your | | | | interest rates because you are a high-risk borrower |
| debt. As a general rule, an IVA will take five years to | | | | following your IVA. |
| complete. However, some plans can last for longer. | | | | |