Do I Qualify For An IVA?

There are five points you should fulfil if you want to qualify for an IVA. Here we explain them and what to do if you think you fall short of the criteria.

What is an IVA?

An IVA (individual voluntary arrangement) offers a way to pay back multiple debts through single, affordable, payments. A legally binding agreement between you and your creditors, it can be quite flexible and tailored to suit your needs.

As an IVA is legally binding, it must be set up by a qualified individual – known as an insolvency practitioner. In brief, this person will work with you to identify suitable timescales and repayment plans. Next, he or she will present this proposal to your creditors and – if agreed – the IVA shortly comes into effect.

As well as helping deal with unmanageable finances, an IVA can be an effective way to gain protection against creditors and prevent bankruptcy.

Can I get an IVA?

The qualifying criteria for an IVA can vary between insolvency practitioners but, generally, they will focus on the following areas:

1. A regular income

Although you don’t have to be employed to qualify for an IVA, a payment plan must be agreed. Therefore, only those with a regular, sustainable source of income should apply. Although employment is recommended, this source of income could also include:

  • Contributions from third parties
  • Benefits
  • Deductions from a large lump sum (for example, inheritance)
  • Pension

2. Combined debts of at least £6,000

An insolvency practitioner will usually consider an IVA a suitable option if an applicant has combined debts of at least £6,000. However, this figure is not inflexible. There is no official minimum debt level for an IVA but most practitioners will generally work with those who owe sums around this number.

3. The IVA is preferable to bankruptcy

For the IVA to be approved, your insolvency practitioner should be able to demonstrate that your creditors will receive a higher return through this solution than bankruptcy. It is for this reason that most creditors will agree to a reasonable IVA proposal.

4. You are based in either England, Wales, or Northern Ireland

IVAs are not available to those living in Scotland. However, something very similar exists called a trust deed. There are some differences, however, such as those handling the agreement are referred to as ‘trustees’ rather than insolvency practitioners.

5. You owe more than one creditor

Those who owe money to at least two creditors – and cover the criteria above – will usually be eligible for an IVA.

How much do I need to pay to qualify for an IVA?

During the IVA application process, your insolvency practitioner will help identify suitable repayment periods and timelines. Consequently, this amount can vary from person to person depending on personal circumstances. However, minimum payments for an IVA are generally around £70 per month.

Can I apply for an IVA?

Even if you don’t conform to the qualifying criteria above, there may be other debt solutions which are more suitable for you. To identify how we can help you tame your finances, get in touch with our specialist team today through the contact form or by calling 0161 200 1139.

With no obligation on your part, we’ll be happy to discuss your circumstances and identify the best solution for your needs.

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