debtconsolidation-programs

Will I lose my home on an IVA?

All debt solutions have their upsides and their downsides. When you're looking for the right debt solution for you, you'll want to consider which one would have the least negative impact on you, as well as which one can help you the most.

Bankruptcy, for example, may force the sale of your home (or other expensive assets) so you can pay more towards your debts. Enter an IVA (Individual Voluntary Arrangement), on the other hand, and you'd be extremely unlikely to lose your home, even though you may have to release some of the equity in it if you are a homeowner.

In fact, an IVA doesn't affect any secured debts you have at all - although it should help you keep up with your mortgage payments, since your payments to your IVA would be calculated to leave you with enough for your essential expenditure (like your mortgage payments).

Is an IVA different to other debt solutions?

IVAs were brought in under the Insolvency Act 1986, and can help people who wish to avoid bankruptcy and its downsides. For example, an IVA has fewer implications for the individual's employment prospects: unlike bankruptcy, it doesn't have any statutory restrictions on employment. It'll still have a significant impact on your credit rating, though.

Like any debt solution, it's designed to help people in specific circumstances. You'll only be eligible for an IVA if you can demonstrate that your debts are unaffordable, and that you can commit to regular monthly payments.

Is an IVA better than bankruptcy?

This all depends on your situation: no one debt solution is 'better' than another. The right debt solution for you will depend on a number of things, such as your ability to repay the debts in full, your income, how much debt you're in, what you own, etc.

Bankruptcy can be the best option for some people. It has a few advantages over IVAs: for example, you'll usually be discharged in a year (compared with the typical five-year period on an IVA), and you won't necessarily have to commit to regular monthly payments.

But if you're a homeowner, bankruptcy could well lead to the sale of your home, which may be a factor that makes an IVA more suitable for you.