IVAs - what are the disadvantages of entering into IVA? - Bankruptcy UK
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IVAs – what are the disadvantages of entering into IVA?
Although 70% of your debt might be written off, a large percentage of this is added back in IVA set up fees.
IVA fees can range from anywhere between £5000 – £13,000 depending on the amount of debt involved.
You may have to pay more to creditors and for much longer than you would do if you became bankrupt.
For example, you may have to volunteer to pay regular contributions from your salary over a period longer than three years in order to make the arrangement attractive to creditors.
Your home and assets may still be at risk. (There is a review conducted in the fourth year of your IVA that can ask for equity to be released from your property).
If the IVA fails, you can still be made bankrupt.
All IVAs are recorded in a public register which may make it difficult for you to apply for credit in the future. You are still classified as bankrupt as you are unable to pay your debts as they fall due.
Failure to re-mortgage your property in the 4th year always results in you having to remain in the IVA for a 7th year
You will probably need to spend more time with an insolvency practitioner working out how to realise your assets than you would spend with a trustee if you became bankrupt. The costs of paying an insolvency practitioner are high.
If you are in certain professions, for example, a solicitor, entering an IVA may mean that you can no longer practise, or may practise only subject to certain conditions.
A creditors’ meeting cannot approve of an IVA which affects the rights of a secured creditor unless that creditor agrees.
IVAs do not end in automatic discharge (unlike most bankruptcies).
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