Can I keep my home if I enter an IVA?

One of the benefits of an IVA (Individual Voluntary Arrangement) is the fact that you should be able to stay in your home - as long as you keep up with your mortgage payments. Some debt solutions, such as bankruptcy, may require you to sell your home.

Although an IVA can allow you to stay in your home, however, you may have to release some equity during the final year (Individual Voluntary Arrangements usually last five years).

So is an IVA worth it?

Releasing equity will be a concern to many homeowners. It is, however, generally seen as a lot better than having to sell your home altogether.

One of the benefits of an IVA is the fact that it is designed to fit around your mortgage payments. When you start an IVA, an Insolvency Practitioner will help you work out how much money you spend each month on 'essential expenses'. This includes your mortgage (or rent, in the case of tenants), bills, food and petrol.

These expenses will not be disrupted by your IVA: you will only use the money left over to pay towards your unsecured debt repayments.

For more information about IVAs, click here.

Are there other advantages?

Other advantages of an IVA are:

• It will allow you to replace several unmanageable unsecured debts with one monthly payment designed to be affordable.

• Interest and charges on your unsecured debts will be frozen.

• You will be protected against legal action from your lenders.

• You will be guided through the process by an expert Insolvency Practitioner who'll provide help and advice.

What about the disadvantages?

One of the disadvantages of an IVA is the fact that you may have to release equity. There are a couple of other things you may have to think about.

For example, an IVA will have a negative effect on your credit rating for six years. During this time you may find it harder or more expensive to obtain further credit.

You will not have much money to spare during your IVA. This is because you will be expected to contribute as much as you can afford towards your unsecured debts - though you will have a bit of leeway in case of unexpected expenses.

An IVA does last longer than traditional bankruptcies - which can be over in a year (though you could be paying contributions for up to three years).

It's worth bearing in mind that though there are disadvantages to IVAs, there are also disadvantages to continuing to struggle with debt - including potential damage to your credit rating.

If you're not sure whether an IVA is right for you, fill out our callback form and a friendly expert will be in touch to discuss your options.

By Daniel Culpan.