If you start an Individual Voluntary Arrangement (IVA) you will stop making your normal monthly payments to your creditors. This means that your accounts will go into arrears or further into arrears.
As a result of this your creditors are likely to record missed payments on your credit file and also issue you with a default notice which will also be recorded. In addition your IVA will be listed on your credit file. This will have a negative effect on your credit rating and make it more difficult for you to borrow money.
The record of your IVA will remain on your credit file for 6 years. Your credit rating will not start to significantly improve until this time has passed and the record of your IVA has been taken off your file.
Remember if you are insolvent and considering an IVA, your credit rating is likely to become worse whether you start the solution or not. If you are in a position where you cannot pay your debts you are likely to start missing payments to your creditors even if you do not start an IVA. As a result your credit rating will be negatively affected with missed payment and default notice records anyway.
If you start an IVA or any other debt management solution you have the opportunity to get your debts under control and work towards getting a better credit rating in the future.
Only a brief overview of how an IVA might affect your credit rating is given above. More information can be found here: Debt Solutions & Credit Rating
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