Credit cards are one of the most expensive forms of lending. This is because they are unsecured (there’s no collateral) so banks charge more to accommodate the higher risk. Furthermore, banks are notorious for raising interest rates even higher on existing balances… simply because they can get away with it. Long story short, financing through credit cards costs a lot of money!
Fortunately, an IVA can help save from those outrageous interest payments. You see, once you have successfully entered into an IVA with your creditors, no more interest or late payments will be levied against you. This can be a lifesaver if you were paying 30% interest on your cards; at that rate it would be impossible to pay them off! The IVA makes it possible for you to pay on the principal only for five years. If you’re not able to pay off the debts in full at the end of five years, then the remaining money owed will be written off.
Mike, a blogger at CreditCardForum.com, agrees that IVAs can be an important tool for those whom are overburdened by debts. “If you have no other way to break free from your never-ending debt cycle, then an IVA is definitely an option to consider.” It will show on your credit for six years, but at least you will be back on the road to financial freedom. Immediately after you enter in the IVA, you will probably only qualify for basic secured cards, but it will be possible to get approved for the premium credit cards later on. “Once the IVA has fallen off your record, it will be possible to apply for premium credit cards once again.”
In summary, if your debts are out of control, then it might be time to speak with a professional financial advisor to see whether or not IVA would be appropriate for you.