IVA - Basic Eligibility Criteria

Individual Voluntary Arrangement or IVA was introduced by the government as part of the Insolvency Act, 1986. It was basically introduced as an alternative to bankruptcy. An IVA supports the interest of both you and your creditors. It is a legally binding contract between you and your creditors that enables you to repay only a certain percentage of your debts to your creditors. The interest on your loan is frozen which does not allow it to grow any further.

Your eligibility criteria for an IVA will depend on your personal and financial circumstances.

1. You have to be a resident of England, Wales or Northern Ireland. You can be currently living or working abroad. But it is not eligible to those residing in Scotland or outside of the United Kingdom.

2. Your unsecured debts should be over 15,000. Setting up and supervising an IVA is an expensive business so it would not be worthwhile to set up an IVA for smaller amounts of debts.

3. You need to be able to pay a minimum dividend of 30% to your creditors. Creditors usually do not accept an IVA that gives than less than 30% of what is owed to them.

4. You need to be insolvent which means that you should not possess any material assets that you could use to pay off your debts. This criterion prevents debtors from using IVA as a mechanism to avoid repaying debts in full.

5. You need to owe money to at least three different creditors. You cannot be holding three debts to the same bank.

6. You either need to be employed or should have a regular stream of income. You should have documents that prove you have a stable income. Usually, the criteria states that you need to have a monthly disposable income of at least 200.

The IVA team will assess whether you meet the above criteria and then will let you know whether you qualify or not. All these criteria are not entirely rigid and creditors will assess a case on its own merits. In case you do not qualify, you may be recommended other debt solutions such as debt management or debt counseling.

I am a content writer presently freelancing with various websites. I was previously working for an e-learning company.

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