Hi Daisy
The comments above are correct, one of the major disadvantages of an informal debt plan is that it is not legally binding on your creditors, therefore they can still pursue you for the debt (including interest and charges which can continue to be added) whereas in an IVA the creditors are all bound and the interest is frozen at the date of approval (unless you find yourself in a position to repay in full during the term of the IVA in which case creditors may be entitled to interest as well). As all creditors are bound this means that no creditor can take any further action against you to recover their debt.
The other disadvantage of an informal debt plan is that you will not be able to say when it will end, as the IVA Squirrel says above, you may be required to continue to make payments until you have paid your debts off in full. An IVA will be for a specific duration, depending on your circumstances, but usually for 5 years. Once the IVA is completed your creditors will receive a payment, a final dividend, and the Supervisor of the IVA will issue a certificate of completion and you will be released from those liabilities which were included in the IVA.
Hope this helps
AccumaGroup
http://www.accumagroup.com - One of the UKs leading debt and insolvency advice firms with over 200 employees.
