How Much Debt do I Need to Qualify for an IVA?

November 11, 2014

Luke-Notley small (Custom)An Individual Voluntary Arrangement (IVA) can help debtors realign their repayments to creditors to a more suitable level – allowing them to pay off all or part of their debt. An insolvency practitioner will ascertain suitable repayments which will satisfy both the debtor and the creditors – implementing a new payment scheme.

An IVA is a legally binding agreement, designed to help debtors pay as much of their debt as possible without plunging them into additional financial trouble. However, there are a few requirements which must be met for the debtor to qualify for an IVA.

The debtor must have a minimum debt level of £12,500. There are some debts which cannot be included in an IVA, including:

  • Mortgages
  • Secured Loans
  • Current Utility Bills
  • Hire Purchase Payments
  • Students Loans
  • Benefits Overpayments
  • Child Maintenance
  • Council Tax
  • Court Fines

These are considered priority loans and necessitate full repayment outside of an IVA.

When applying for an IVA, a debtor must be able to demonstrate they also have a minimum disposable income of £125. Additionally, IVAs can only be sought by debtors with at least three creditors.

What If I Don’t Have Enough Debt?

If your level of debt is too low to qualify you for an IVA, there are alternatives which can be sought. A Debt Management Plan only requires a minimum of £1,000 in unsecured debts. This plan is better suited to debtors struggling to pay off lower levels of debt. Requiring a monthly minimum disposable income and two or more creditors, debt management plans often operate on a smaller scale than IVAs.

Alternatively, debt relief orders are designed to help debtors write off debts of less than £15,000. This solution is aimed at debtors with little income or assets, helping them write off their debts after 12 months.

For more information about the options available to help ease your debt – visit the InControl homepage or call our customer services team on 0800 072 6623.