Will an IVA freeze my interest rates?

An IVA will guarantee that the amount you owe will not increase

We receive a lot of calls and emails from the public asking; "Will an IVA freeze my interest rates?".

Please note that an IVA is legally binding agreement on your creditors in which you have the opportunity to freeze your interest rates and make lower repayments. Under an IVA the monthly payments will be affordable. The UK Insolvency Helpline will only recommend an IVA if the IVA unit feels creditors will freeze interest and other charges.

If an IVA is not suitable because the creditors refuse to freeze interest then other options such as debt management or bankruptcy will be recommended as an alternative.

IVA will freeze interest rates

An IVA will guarantee that the amount you owe will not increase and the IVA will freeze the interest rates. More and more people are applying for an IVA via Money Advice Direct when their debts get out of control.

The IVA is an extremely powerful tool enabling you to clear your debt and return to a clean financial bill of health. An IVA takes about 4-8 weeks to set up. Once set up all interest will be frozen.

This procedure is not to be confused with debt management, which is not legally binding. The main advantage of an IVA is that it freezes interest on all credit cards and loans.

IVA - key facts you should know about IVAs

An IVA can write up to 75% of debt off
In an IVA it is easier to get a mortgage, whereas in bankruptcy it is very not possible until discharge.
An IVA will stop all interest on the debt.
The IVA will leave the client debt free (subject to terms and conditions) after 5 years maximum.
After an IVA is completed the debts are clear.
In a IVA you can keep your property, unlike bankruptcy where if you have equity you will need to sell it.
In an IVA you get to keep control of your assets, whereas in bankruptcy they come under scrutiny.
An IVA is better for your career progression whereas bankruptcy may cause problems in certain industry sectors.
If you can do an IVA you can still be a director of a limited company, whereas in bankruptcy may you cannot.
An IVA has less social stigma than bankruptcy.
An IVA is easier on you credit rating than bankruptcy.
In an IVA it is easier to get a bank current account, whereas in bankruptcy it is very difficult.
Bankruptcy involves lengthy court procedures, whereas an IVA avoids court action
Bankruptcy is more expensive to set up than an IVA.

If an IVA fails to free interest rates there are alternatives such as:-

Consolidation loans - this may provide an affordable solution. However by taking out such a loan, it may make matters worse overall, not better. The lender may register a charge against your property as security. Rates of interest could be higher than expected.
Re-mortgage - if there is sufficient equity in your property, it may be more advantageous to re-finance and pay off your debts. Rates of interest would generally be much lower than say, a consolidation loan package. IDS can assist you in obtaining such refinance. Realising your equitable interest in your property may prove difficult.
Bankruptcy – Bankruptcy is an option that often has to be considered when an individual cannot pay their debts as they fall due. A first time bankrupt with debts will generally receive their discharge one year after the date of the bankruptcy order (there is the possibility that in some cases the bankruptcy discharge period will be less than one year). Although bankruptcy has a bad stigma and is publicly advertised, it should always be considered when dealing with individual insolvency cases. Please note that if you are ever faced with the prospect of bankruptcy you should look at alternatives as soon as possible such as the IVA.
Debt Management - Your creditors are offered reduced payments. Creditors generally are happy to agree debt management plans that are realistic and sustainable. Under debt management You make a single monthly payment, all of which is distributed pro rata to your creditors.

If you would like to know if an IVA Will freeze your interest rates please complete the following form or telephone freephone 0800 074 6918.

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IVA's

The IVA Guide
Money Advice Direct has put together an IVA Guide based on the enquiries and questions that we receive at our helpline offices.

In the guide we cover such subjects as IVA Approval, early settlment of your IVA, missed IVA payments, IVA failure, additional debt claims and much more.
[click here for IVA Guide]

What is an IVA?
The IVA is an extremely powerful tool enabling you to clear your debt and return to a clean financial bill of health. Visit Money Advice Direct's Guide to Individual Voluntary Arrangements (IVAs).
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Will an IVA freeze my interest rates?

An IVA will guarantee that the amount you owe will not increase

IVA will freeze interest rates

IVA - key facts you should know about IVAs

If an IVA fails to free interest rates there are alternatives such as:-

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