Choosing IVA as an option when you are struggling with high debts is a good solution to undertake. However, your credit rating will have to suffer, as IVA will stay within your records for up to six years. An IVA usually takes 5 years to complete, while if you choose the full and final settlement within an IVA that will take three months to complete. During this term, you are not allowed to take out any loans, as creditors will not make you eligible for any types of loans. This is so, because you represent a greater deal of risk to the lender than someone who has a good credit rating.

You have successfully completed your IVA when:

• You kept up with all the required repayments
  
  
• Creditors have recuperate their losses
  
  
• And you received a certificate of satisfaction (which testifies that you have no more debts)
  
  
• After the process, you can start slowly re-building your credit history. Firstly ask for a copy of your credit rating from one of the credit bureaus entitled to disclose such information (Equifax, Experian), so that you know exactly where you are standing. You have the right to receive one free copy per year of your credit report, from one of the credit reference agencies mentioned. A small fee is applicable if you wish to take out more copies on a yearly basis (usually £2)

You have to show responsibility and take it very seriously if you decide to go through an IVA. It will take several years until you can call yourself debt free, and it definitely requires some sacrifices to be made. Sometimes, you might be even required to release equity from your home in order to be able to repay your debts. If you choose the full and final settlement, that means you are required to pay 25% of your debt as a lump sum, plus the fee of the insolvency practitioner which is around £ 5,000.

You need t decide for yourself which is the best solution in your particular case. If you have a stable job, and can make good proof of income, then most probably you can afford smaller payments over a longer period of time. If, on the other hand you cannot make roof of stable income, but you are the rightful owner of a property, then, your sole option seems to be selling the property or releasing equity in order to pay back the debts.

Professional advice is always needed, especially if you cannot decide on your own what to do. A highly qualified individual can always redirect you towards the best solution. An IVA program can work as a tool which teaches you how to successfully manage your finances, and how to avoid debts in the future. Such an experience will definitely teach individuals to be more responsible:

• You will make a more thorough research whenever you shop around for the best loan
• You will not enter into dealings where the loans come with very high extra charges
• You will take out loans only from trustworthy lenders
• You will not take out a loan, unless it is truly necessary (emergency cases, home improvements, etc)