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Individual Voluntary Arrangement's (IVA)

✅ Pros of an IVA

Legal protection – Creditors can’t chase you, add interest, or take legal action once the IVA is in place.
Affordable payments – You make one monthly payment based on what you can realistically afford.
Fixed term – Usually lasts 5–6 years, after which any remaining unsecured debt is written off.
Consolidation – Simplifies multiple debts into a single plan.
Keeps assets – You may be able to keep your home and car, unlike in bankruptcy.
Debt-free future – At the end, you’re free of the debts included in the IVA.

⚠️ Cons of an IVA

Credit rating impact – Stays on your credit file for 6 years, making new credit difficult during that time.
Not all debts covered – Certain debts (like student loans, fines, or child support) aren’t included.
Public record – Your IVA is listed on the public insolvency register.
Failure risk – If you miss payments or your circumstances change, the IVA could fail, leaving you back in debt.

✅ Pros of a DMP

One monthly payment – Simplifies managing multiple debts.
Lower interest/charges – Creditors may agree to reduce or freeze them.
Flexible – Payments can usually be adjusted if your income changes.
Non-legal – It’s an informal arrangement, so no court involvement.
Stops pressure – Creditors may stop collection calls and letters once payments start.

⚠️ Cons of a DMP

Takes longer – Because payments are smaller, it can take many years to clear debts.
Credit file impact – Missed or reduced payments will affect your credit rating.
Not binding – Creditors don’t have to freeze interest or accept the plan.
No debt write-off – You still repay the full balance unless creditors agree otherwise.
Unsecured debts only – Doesn’t cover mortgages, car finance, or other secured loans.
Risk of slipping – If you miss payments, creditors may resume collection or legal action.

✅ Pros of a Secured Loan

Lower interest rates – Because the loan is backed by collateral, lenders usually charge less interest.
Higher borrowing limits – You may be able to borrow more compared to unsecured loans.
Longer repayment terms – Repayment periods are often more flexible and spread out.
Easier approval – Collateral reduces risk for the lender, making approval more likely even with weaker credit.
Improves credit score if managed well – Timely repayments help build or repair credit history.

❌ Cons of a Secured Loan

Risk of losing collateral – If you default, the lender can repossess your home, car, or asset used as security.
Long-term debt commitment – Extended repayment terms mean you’re tied to the loan for longer.
May incur extra fees – Setup, valuation, or early repayment charges can add up.
Negative equity risk – If your asset (like a property) loses value, you might owe more than it’s worth.
Credit damage on default – Missing payments can harm your credit score and still lead to asset loss.