We’ve spoken to a number of customers who’ve been under the illusion that because their subject to an IVA (Voluntary Arrangement) that they’re ok to apply for a further loan. Not in our experience.
Firstly if you’re not sure what one of these things is, an IVA is an agreed debt reduction between you and your creditors. It’s more formal than debt management because it’s agreed using insolvency practioners. They last for 5 years unless you clear it sooner and the advantage is that you can write off up to 80% of your debt.
The IVA thing is being marketed as a cure for all people with debt problems and there’s no shortage of companies out there selling these things on the Internet, newspapers even on the radio.
Most people faced with the prospect of entering an IVA would otherwise be looking at a Bankruptcy and IVAs are sold as the better alternative. Certainly if you’re a homeowner faced with the prospect of losing your home, sure it’s going to let you keep your home. If not and you don’t have assets, a bankruptcy is generally only going to last 1 year not 5. Talk to your local Citizens Advice Bureau before taking either step. www.citizensadvice.org.uk The advice will be free.
So why then if you’ve gone for an IVA and avoided a bankruptcy can you not get a loan? Certainly officially you can apply for a mortgage or car finance, but just like a CCJ or credit default, the IVA is going to show up on a credit search and will be with you for the full duration and up to six years. Of course the same can be said of bankruptcy, it still shows up sfter you’re discharged but after 1 year you’re free of it’s constraints.
Let us know if you obtained a personal loan whilst within an IVA.
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