Negative aspects of an Individual Voluntary Arrangement.
Individual voluntary arrangements should not be entered into lightly. They are legally binding agreements between you and your creditors to resolve the debt issue. An insolvency practitioner will be best able to advise you further but some of the drawbacks of Individual voluntary arrangements are given below.
- Home equity release. If you have sufficient equity (value) in your home or other significant asset you may be required to release this to pay off your debt as part of the agreement.
- There is a minimum level of debt. Typically you will need to have unsecured borrowing of in excess of £15,000 between three or more creditors and be able to afford a minimum monthly payment of at least £200 per calendar month.
- No further unsecured borrowing. You will not be permitted to have credit or store cards under the terms of an individual voluntary arrangement, these will all need to be cut up, also catalogues will not be used. It may however be able to change your mortgage or take out a new one whilst in an Individual voluntary arrangement.
