Benefits of an IVA explained

Individual voluntary arrangements (IVAs) have many advantages compared to other options for dealing with severe debt problems, an expert has said.

Director of the Debt Support Trust Stuart Carmichael said the use of an IVA still counts as insolvency and carries a six-year credit file note as with bankruptcy, but does not cause the same problems in other ways, because the money is written off at the end of the period.

As a result, he explained: “You can still hold professional titles, such as being an accountant and things like that. Whereas [with] bankruptcy, you can lose any titles – and that could affect your job – and IVAs as a form of insolvency are not thought of as being as severe.”

Mr Carmichael also noted the IVA option involves “paying what you can” and is seen as being the right thing to do by many people, rather than trying to wipe out debts through bankruptcy.

And he also stated there are advantages in such a move compared with a debt management plan, as the latter does not lead to interest being frozen and can last much longer than the five year maximum of an IVA.

Earlier this week, national PR officer for Christians Against Poverty Marianne Clough said an IVA can often be the most viable way to deal with severe debts.

She gave the example of a man who took one out when not doing so would mean it would take him 41 years to clear off everything he owed.

By James Francis