Do I qualify for an IVA?

When considering your options, while trying to clear or minimise your debts, it’s important you take an IVA seriously. Considered a preferable option to bankruptcy, an IVA allows you to consolidate your debts into one easily manageable monthly repayment, freezes all charges and interest and allows you five years to clear what you owe. This form of debt repayment can also pay off a bulk of the amount owed immediately, so it’s a great option for those who have tried everything else and see no way out of their debt problems.

If you are struggling with debt and have exhausted all other solutions, then an IVA may help. But before you apply it’s important you understand what it entails and if you qualify…

Do I have to owe a certain amount?

An IVA is unlikely to be approved if you owe less than £7,000. It is a solution for those with a considerable amount of debt who feel like they cannot make the minimum monthly payments or see an end to the payments due to the charges and interest that are consistently added on.

What other requirements must I have?

To qualify for an IVA you should also reside in England, Wales or Northern Ireland and be able to afford payments of at least £50 a month to pay creditors, on top of your other monthly bills and expenses. You should also be absolutely committed to clearing your debts and willing to cut back in order to make this happen.

What does the vetting process involve?

Once you have stated your situation and applied for an IVA your creditors will judge your application and then vote. At least 75% of your creditors must vote in favour of your IVA for it to be approved.

Will the setting up of an IVA cost me anything?

If you work with a trusted debt management company, such as a well known one like PayPlan for example, then there should be no upfront arrangement fees. Your financial situation will simply be assessed to work out how much you can pay on a monthly basis and then an agreement will be written up between you and your creditors. It’s rare you will need to do any negotiation with creditors yourself. The debt management company you are working with should do this for you.

Is there any risk?

When it comes to debt, there is always risk and with an IVA you may have to remortgage your home to release its equity, in order to pay off a bulk amount of what you owe. An IVA also takes 60 months (five years) to complete, so you need to be prepared to make payments for this amount of time and not take out further credit.

If you are thinking of applying for an IVA then seek advice from a reputable source, where you can find out more about the process and what it entails.