If you are struggling with debt, an Individual Voluntary Arrangement (IVA) could be a viable solution to help you manage your repayments and potentially write off some of your debt. To qualify for an IVA, there are certain criteria that you must meet. In this article, we will outline the key requirements for qualifying for an IVA.
What is an IVA?
An IVA is a legally binding agreement between you and your creditors to repay your debts over a set period of time, usually five years. It is a formal arrangement that is administered by an insolvency practitioner (IP) who will work with you to determine what you can afford to repay each month. Any remaining debt at the end of the IVA is typically written off, although this is not guaranteed.
Qualifying for an IVA
To qualify for an IVA, you must meet the following criteria:
- You must have unsecured debts of at least £6,000: Unsecured debts are debts that are not secured against an asset such as a house or car. Examples of unsecured debts include credit card debt, personal loans, and store card debt.
- You must have at least two creditors: An IVA is a formal agreement between you and your creditors, so you must have at least two creditors to be eligible.
- You must be able to make regular payments: To be eligible for an IVA, you must be able to make regular payments towards your debt. Your IP will work with you to determine what you can afford to pay each month.
- You must have a regular income: To be able to make regular payments, you must have a regular income. This can be from employment, self-employment, or benefits.
- You must have a willingness to repay your debts: An IVA is a formal agreement to repay your debts, so you must be willing to do so.
- You must live in England, Wales, or Northern Ireland: IVAs are only available in these parts of the UK. If you live in Scotland, you may be eligible for a similar solution called a Trust Deed.
The IVA process
If you meet the eligibility criteria for an IVA, the next step is to find an insolvency practitioner (IP) who will administer your IVA. Your IP will work with you to determine what you can afford to pay each month and will contact your creditors to propose the IVA.
Your creditors will then have the opportunity to vote on whether or not to accept the IVA proposal. If 75% or more of your creditors (by value of debt) vote in favour of the IVA, it will become legally binding on all creditors, including those who voted against it.
During the IVA, you will make regular payments to your IP, who will distribute the money to your creditors. If you have any assets that can be sold, such as a property or car, you may be required to sell them to repay your creditors.
At the end of the IVA, any remaining debt will typically be written off, although this is not guaranteed. You will then be free from your debts and can start to rebuild your financial future.
Conclusion
If you are struggling with debt, an IVA could be a viable solution to help you manage your repayments and potentially write off some of your debt. To qualify for an IVA, you must have unsecured debts of at least £6,000, at least two creditors, be able to make regular payments, have a regular income, be willing to repay your debts, and live in England, Wales, or Northern Ireland. If you meet these criteria, you can contact an insolvency practitioner who can guide you through the process of setting up an IVA.