Is an IVA Right for Me?

Adam

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If you’re facing overwhelming debt, an Individual Voluntary Arrangement (IVA) could be the solution you’re looking for. However, before deciding if an IVA is the right choice, it’s important to understand whether you qualify and how it can help you achieve financial freedom. Here’s a breakdown of the eligibility criteria and why it might be the right path for you.

Who Can Apply for an IVA?
An IVA is a formal arrangement with your creditors, allowing you to pay back a portion of your unsecured debts, typically over 5 years, while the remaining amount is written off. It’s important to know that IVAs are available for people with unsecured debt, usually of at least £6,000. This could include:

Credit cards
Personal loans
Payday loans
Store cards
Overdrafts
HMRC Debts
Council Tax Arrears
Rent Arrears

If your total unsecured debt is less than £6,000, an IVA may not be a viable option for you. But if you do have that amount or more, it could be a lifeline to get your finances back on track.

Affordability and Payments: How Does It Work?
While qualifying for an IVA is based on many factors, including the total amount of your debt, what matters is whether you can afford the monthly payments. The amount you pay will depend on your income and living expenses, ensuring the payments are always manageable.

Typically, payments are calculated to be affordable based on your circumstances, and an income and expenditure would be done with you to ensure that all expenses are covered before seeing what is potentially left for your monthly payment. This ensures you are able to live comfortably whilst maintaining regular payments towards your debts.

Your payments are reviewed regularly, and if your income changes, they may be adjusted accordingly. This flexibility ensures the IVA remains manageable and effective for the entire period.

What Are the Benefits of an IVA?
One of the main reasons people turn to an IVA is the significant debt reduction. While you make regular payments, a large portion of your debt could be written off—potentially as much as 70%, depending on your individual circumstances.
In addition to the debt relief, you will also benefit from:

Protection from Creditors: Once your IVA is in place, creditors cannot take legal action against you.
Interest and Charges Frozen: Your creditors will no longer add interest or fees to your debts.
Clear Path to Debt Freedom: The IVA typically lasts for 5 years, providing you with a clear timeframe to become debt-free.

Is an IVA the Right Debt Solution for Me?
An IVA could be the ideal solution if you have significant unsecured debt that you’re struggling to manage and can afford to make regular monthly payments. It may be a good option for if:

You are missing debt repayments and/or worried about your mounting debt.
You’re facing creditor harassment or even legal action.
Your debts are high, but you don’t see a way out.
You find it difficult to manage multiple creditors and feel one monthly payment for them all would be ideal
You are finding it difficult mentally to deal with your creditors yourself

While an IVA may not be the best solution for everyone, it offers a structured and manageable way to deal with your debts, giving you the chance to rebuild your financial future.

Need Help Deciding if an IVA is Right for You?
If you’re unsure whether an IVA is the right debt solution for you, our friendly advisors are here to understand your situation and explore all available options.