IVA Criteria

The IVA came into being as part of the Insolvency Act of 1986 and is essentially an agreement with your creditors to pay a reasonable amount of money towards your total debt each month, usually for a term of 60 months. After successfully completing this repayment schedule, the remainder of your debt is written off and you’re left debt free.

The majority of IVAs, or Individual Voluntary Arrangements, are the result of falling into arrears with your consumer credit. That is, debts like credit cards, store cards and personal loans. In most cases, an IVA will be a preferable debt solution to bankruptcy because it isn’t published in your local paper and because there is less risk to your home or other assets. They are a legally binding solution to severe debt problems and should not be entered into lightly. Speak to one of the specialist advisors at Debtsolver to see if an IVA would be a suitable debt solution to your financial circumstances.

To help you decide if an IVA is the right solution for you, we have outlined some of the criteria that you would be expected to fulfil if an IVA was the most suitable course of action in tackling your debt problems. These are just guidelines though, talk to Debtsolver for a breakdown of the various debt solutions that are available to you. Use the quick, free and easy Debt Wizard to see if an IVA is right for you.

Firstly, IVAs are not available to those in Scotland or outside of the UK. The mechanism in Scotland that is most similar to the IVA is called a Standard Trust Deed. More information on this is also available from Debtsolver. You can still apply for an IVA if you’re a resident of England, Wales and Northern Ireland who is currently living or working abroad.

An IVA is not a way to dodge paying off your debts. In order to qualify, you will need to provide evidence of your insolvency. That is, your inability to maintain debt repayments. Your arrears will also have to exceed £15,000 worth of unsecured debt. Other debt solutions will tend to be more suitable if your outstanding debt is below this threshold.

IVAs are legally binding arrangements between you and your creditors, brokered by an dedicated Insolvency Practitioner. The legality of the agreement serves to protect both your interests and those of your creditors. For a better understand of Debtsolver’s IVA protocols, talk to one of their specialists. Any agreement will hinge on your creditors voting in favour of the IVA. In order to qualify, 75% of your creditors will need to be in favour of your suggested return. This percentage is defined, not by creditor headcount but by percentage value of the total debt. So, if you owe more than 25% of your total debt value to one creditor, they can veto the arrangement. Having the support of a trusted and recognised industry specialist like Debtsolver gives added credibility to any proposal and they will also be able to best advise you on a realistic repayment amount.

You'll also be required to prove that the proposed repayment amount will be maintained over the duration of the arrangement term. Your creditors and your dedicated Insolvency Practitioner will work with you to reach an agreement that will be serviceable and realistic. You'll be obliged to prove that your living expenses are reasonable and that you’re making savings wherever possible. That means cutting back on frivolous purchases like alcohol, tobacco, satellite TV and Mobile phone bills.

Although your assets are secure, providing you maintain the agreed payment schedule, anything that you could reasonably sell or release equity from will be considered in the proposal. That could mean the equity tied up in your house, a private pension or an expensive car. Any effort to disguise such assets will be reported by your Insolvency Practitioner. As the arrangement commonly has lasts 60 months, starting on a foundation of honesty is paramount. You’ll also need to prove your financial circumstances by supplying payslips, bills and, where applicable, a valuation of your home and other assets.

An advisor at Debtsolver will be able to take you through these criteria in greater detail but to see if you’d be suitable, fill in their fast, free Debt Wizard.