Do I Qualify For an IVA?

Adam

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If you're considering an Individual Voluntary Arrangement (IVA) to help manage your debts, you may be wondering, "Do I qualify for an IVA?" The good news is that many people are eligible for an IVA, but there are certain criteria and conditions that must be met for you to qualify.

In this blog, we’ll break down the key requirements for qualifying for an IVA and help you understand the process. Let’s take a look at the main factors that determine whether an IVA is a viable option for you.

General Criteria for an IVA
To qualify for an IVA, there are a few basic requirements that generally apply:

You must live in the UK
IVAs are only available to people who live in England, Wales, or Northern Ireland. There are alternative solutions for those living in Scotland. If you live outside of the UK, an IVA will not be available to you.

You must have at least £6,000 of unsecured debt
This is typically the minimum amount of debt you need to be eligible for an IVA. Unsecured debts include credit cards, personal loans, payday loans, store cards, and overdrafts. If your debts are lower than this amount, an IVA may not be the right solution for you.

You need to have more than one debt
An IVA is designed to help people who have multiple debts to manage. If you only have one creditor or one type of debt, an IVA is unlikely to be the best option for you.

You must be able to afford monthly repayments
Generally, you need to be able to make monthly payments of at least £90-£100 to your creditors in order to qualify for an IVA. This will depend on your income and expenditure, which will be assessed by an IVA advisor. The payment should be affordable, and it should leave you with enough money to cover your essential living costs.

The Voting Process
Once your IVA proposal is ready, it will be presented to your creditors for approval. Here’s where the process can get a little more nuanced:

75% of your creditors (by debt value) must agree to your IVA proposal
This means that if your creditors vote on your proposal, 75% of them, based on the total debt value, need to be in favour for it to be approved. It’s important to note that creditors may either accept, reject, or abstain from voting. If the majority of the creditors agree, the IVA will be approved.
Creditors vote by the amount you owe them
The more you owe a particular creditor, the more influence they have on the vote. For example, if one creditor holds a large portion of your debt, their vote carries more weight than that of a creditor with a smaller balance.

Factors That Can Affect Your Eligibility
While meeting the basic criteria is important, it’s also worth noting that there are a few factors that can affect your eligibility for an IVA. For example:

Equity in your property
If you own a home and have significant equity in your property, certain creditors may be hesitant to accept your IVA proposal. Some creditors may prefer that you release the equity from your property to pay off your debts. However, this depends on the individual circumstances and your creditors.

The nature of your creditors
Different creditors may have different criteria or may respond differently to an IVA proposal. Some creditors may be more flexible in accepting reduced repayments, while others may be more rigid or have stricter conditions for accepting an IVA. It’s essential to understand your creditor situation, as this will influence whether an IVA is likely to be accepted.

Final Decision: Is an IVA Right for You?
The decision to accept or reject an IVA proposal is ultimately up to your creditors. However, working with a professional advisor can help you understand your eligibility and guide you through the entire process. An advisor can go through your specific situation, explain the nuances of your creditors’ potential responses, and help you build a proposal that stands the best chance of being accepted.

Get Expert Guidance with Stop My Debts
If you're wondering whether you qualify for an IVA, don’t hesitate to reach out to one of our expert advisors at Stop My Debts. We can assess your financial situation, explain the process to you, and help you understand your options in a clear, straightforward way.