If you qualify for an IVA, it is usually the best solution for you, as the other potential solutions (Debt Management and Loans) will actually increase your debt amount and the term of your repayments.
Your eligibility for an IVA cannot be simply determined by answering a few brief questions. You will need to speak to an expert who will conduct a detailed financial Factfind.
However, there are some basic criteria that can be used to see if you are likely to be accepted for an IVA.
1: Do you have unsecured debts of over £15,000?
Unsecured debts include credit cards, store cards, personal loans and overdrafts.
You may not think that you have £15,000 of unsecured debt. You may have only borrowed £10,000. But if you have not been making your full monthly repayments for even a year, interest and charges will have been added to your debt, which could well have grown to over £15,000 today. It is important that you obtain up-to-date outstanding balances from your creditors.
2: Are you insolvent?
Do not mistake the word insolvent for Bankruptcy. Being Insolvent describes your ability to repay your debt and is not a solution. Prior to IVAs being made available by the government, the only solution for being insolvent was bankruptcy.
Being Insolvent simply means that you cannot afford to repay your debts each month. That is the full contractual payment and not the minimum payment. Do not fall into the trap of repaying minimum monthly payments and thinking you can afford your debts, because with the interest and charges applied you could be paying for up to 40 years. Once it is determined that you are insolvent, and IVA could become an option for you.
3: Do you have a stable income?
An IVA is a debt repayment plan and to make repayments you must have an income. You must therefore be employed.
You would need to commit to paying a fixed but affordable sum each month to your creditors. To agree to this commitment you need a stable income. Bonuses would be accounted for separately and this would be explained in detail during the IVA set-up process.
4: Are you resident in England, Wales or Northern Ireland?
IVAs are only available by law in England, Wales & Northern Ireland. If you are a Scottish Resident then please see our Trust Deeds page, the Scottish equivalent to an IVA.