IVA Qualifying Criteria
The qualification criteria for applying to enter into an Individual Voluntary Arrangement (IVA) is reasonably well defined and can be stated as follows -:
- The debtor must have at least £6,000 of unsecured debt. .
- Types of credit allowed into an IVA include all unsecured loans; credit cards; store cards; catalogues and overdrafts, as well as tax and VAT for the self employed. Mortgages, secured loans and Hire Purchase are excluded from an IVA.
- The debtor should not have any material assets capable of disposal which could pay off the debts.
- Many IVA commentators speak of the need for the debtor to owe money to at least 3 different creditors. There is actually no legal minimum number of creditors but the IVA firms usually like to see different creditors as this gives them more chances to get the IVA approved.
- The debtor will generally need to be in employment. There are IVA cases approved each year where this criterion is not met. For instance if the debtor is on long term sickness benefits and has a partner working. If the debtors' partner is prepared to support the IVA application then the creditors may accept it.
- An equally important IVA criteria is the need for the debtor to have "the right type" of creditors. There are a number of aggressive creditors who may refuse an IVA without even discussing the merits of the individual case. There are also creditors who will reject the IVA, unless the debtor guarantees a certain level of return. The creditors are fully aware that their rejection could well lead to the debtor applying for bankruptcy and then the creditors would lose even more money!
An IVA is a very flexible financial instrument designed to help with a wide range of debt problems. The IVA criteria are not completely fixed and most creditors will look at a case on its own merits. If you think that you have a unique set of financial circumstances then please give us a call and we may be able to advise you on your best course of action.