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Are you in a position where you are struggling to keep on top of credit and store card bills, falling behind on mortgage payments and constantly slipping into your overdraft? If this is the case you may want to look into applying for an individual voluntary arrangement. Such a debt management solution is also known as an IVA and by taking out such a product you may find that the amount of money you pay back to creditors each month fall significantly. But that does not necessarily mean you should dive head first into taking out an IVA. Instead, you will want to consider the impact the arrangement will have on your ability to manage money, particularly with regards to your credit rating. As an IVA sees an insolvency practitioner agree with creditors on your behalf to repay a certain proportion of your debts - typically over a five-year period - you will find your credit rating takes an instant hit. Should you wish to borrow more than £500 you may have to speak to your insolvency practitioner. And while you are typically going to be unable to access credit over the course of an IVA - any money you are able to borrow during your agreement, whether this is a personal loan or otherwise - is likely to be subject to significantly higher interest rates. However, IVAs do not last forever and - provided that you stick to your repayment schedule - you should find that you are in a position where you can begin to repair the damage that your credit rating has suffered. Once the process of repaying money to creditors via an IVA is over you will find that your ability to access credit improves. But as the agreement remains on your fiscal report for around the first 12 months this may initially be a difficult process. With this in mind, however, if you are able to keep on top of money management after this period you are likely to find that your credit rating has been sufficiently repaired so that you can get competitively-priced borrowing without too much trouble. Compared to bankruptcy, an IVA can be a more flexible way of getting out of debt problems and while your credit score will initially be damaged, you can - in time - repair this and get on the path to a brighter financial future.
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IVA, individual voluntary arrangement,
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