An IVA is a difficult debt solution to understand. If you have ever heard of it, you may feel like it sounds complex. With so many websites offering debt solution advice, it becomes quite overwhelming to decide if it is the right option for you or not. Further, many myths surrounding IVA make it even trickier to come to a decision. We are here to debunk the five most prevalent myths regarding an IVA.
There is no debt limit to apply for an IVA
Well, this myth is true to some extent. The law says that there is no minimum or maximum limit of debt one should have before considering an IVA. A person with any debt amount can consider this solution. However, creditors don’t accept an IVA application or proposal from a person with debt less than £10,000.
You can’t extend an IVA
Generally, an IVA lasts for five years. It can be extended to six years, though. However, if your circumstances (personal or financial) change, you should discuss with your IP about extending the IVA period. In case the IP feels that you have genuine reasons to extend IVA, they will agree to put it to creditors for approval.
An IVA requires you to sell your home
Another myth surrounding an IVA is that one has to sell his home. However, the truth is, that there is no obligation to sell your home under an IVA. Your IP may recommend you to release equity from your home or remortgage, depending on the value of your home. Just makes sure to discuss these things with your IP before writing an IP application. This will help you think of the most efficient plan to clear your debts.
People will find out about your IVA
Though it is quite unlikely, but possible if people know where to get to know about your financial situation. As soon as you enter an IVA, it is documented on the Insolvency Register and your credit file. While anyone can check this register, not everyone does. In fact, most people are not aware of a thing like Insolvency Register. Therefore, unless or until you work in an organization where the employer checks his employees’ credit, they can’t find it.
Remember, you should disclose your credit information to your employer if your contract says requires you to do so. For example, an organization that offers financial services doesn’t expect its employees to be bankrupt. So, make sure to check your contract thoroughly.
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IVA terms can’t be changed
Many people think that IVA terms can’t be changed, once greed. But it isn’t true. If your income has increased or decreased, IVA terms can be changed in order to accommodate your income changes. Just inform your IP of these changes and they will work to change the plan accordingly.
In case your income has decreased, the IP will work to amend your budget to justify your monthly payments that are brought down. On the flip side, if your income has increased, your creditors will expect you to increase your IVA contributions.