If you have a bad credit rating, your ability to access certain debt solutions might be affected. However, an IVA (Individual Voluntary Arrangement) is different.

How an IVA can help

An IVA is a debt solution aimed at people who cannot see any realistic way of repaying their debts within a reasonable period of time.

It is a legally-binding arrangement with your lenders in which you will agree to repay a set percentage of your debts, and write off the rest.

On an IVA, you`ll make regular payments (usually monthly) towards your debts, based on how much you can afford. This will normally continue for five years, and on successful completion you will be legally debt-free.

There are some things you should be aware of before you go ahead, though. An IVA is a significant commitment that will require you to give up most of your spare income once your essential costs have been accounted for.

You may be required to give up some of any increase in income during your IVA, and if you are a homeowner, you may also be expected to release some of the equity in your home in the final year.

IVAs and bad credit

A bad credit rating may affect your ability to borrow money, but since an IVA does not involve taking out additional credit, your credit rating will not have an impact on whether your lenders will accept an IVA proposal.

Instead, they`ll want to see a) that the IVA is the most realistic way of them getting back some of the money they are owed, and b) that you can commit to regular monthly payments for the duration of the IVA. Providing they can be confident of these factors, it`s quite possible that your IVA will be accepted.

For more information on IVAs, click here or call today on 0800 074 8639.