Disadvantages of an Individual Voluntary Arrangement IVA

• Where contributions from income are being made, IVAs are generally expected to be for a period longer than that in bankruptcy, i.e. 5 years as opposed to 3 years. The 5-year period is often required by creditors as a bargain for allowing the Debtor (person who owes the money) to avoid the consequences of bankruptcy.
• If the Debtor fails to comply with the terms of the arrangement, his home and assets can still be at risk if they have not been specifically excluded from the proposals.
• If the IVA fails as a consequence of the Debtor not meeting his obligations under it, it is likely that the Debtor will be made bankrupt at this time. There will be no opportunity for a Trustee in Bankruptcy to investigate the actions of the Debtor or possibility of hidden assets. 
• The client should have a minimum of three unsecured creditors and unsecured debts of at least £15,000 for an IVA to be a suitable option.
• The costs of an IVA are relatively high and may have to be paid in advance.
• Assets are at risk if the creditors do not agree to exclude them.
• The client will be closely monitored by the supervisor during the period of the IVA and will have to report any changes of circumstances.
• IVAs are a matter of public record and so future applications for credit could be affected. Your credit rating will be affected for 6 years.
• If the Debtor owns a property & during the period of the IVA the property has equity available, then the creditor can insist that some of this equity be released to further help settle the debt. This usually happens in the third or fourth year of the IVA.