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Are you Qualified to Apply for an IVA? Let’s Find Out

Are you Qualified to Apply for an IVA? Let’s Find Out

Individual Voluntary Arrangement or IVA is one of the most popular debt solutions available to debtors residing in the UK. No doubt, why more than 70000 people choose IVA over any other debt solution every year to tackle the debt. Well, an IVA is a perfect solution for those who want to consolidate their multiple debts and write off their debts in an easy and smooth process. An IVA results in a debt-free future, if the applicant keeps the payment regular and maintains the terms and conditions. But, the fact is that an IVA is not for everyone. Each debt solution comes with its own benefits and downsides, so does an IVA. There are certain criteria that you have to maintain, if you want to apply for an IVA. Otherwise, your creditors might not agree to the IVA proposal. Our expert team can guide you to discover the basic criteria for Qualified to Apply for an IVA.

Quick Glance at the Criteria to Become a Qualified IVA

The financial situation is not equal for everyone. The terms and conditions might vary depending on the circumstances of debtors. Similarly, the set of criteria for applying for an IVA can differ from time to time. Every application for an IVA is considered according to the instances of the debtor.

However, there are some limitations on which your creditors should agree to your IVA, and so does your insolvency practitioner. Generally, a debtor should meet the following list of criteria so that he or she can apply for an IVA.

  • Your insolvency status
  • You owe more than or equal to £5000
  • There is more than one creditor in your case
  • You are liable to pay a minimum amount each month
  • A stable source of income
  • You must be offering an IVA that returns higher than a bankruptcy
  • You must be a citizen of England, Northern Ireland, or Wales

Let’s have a brief discussion on every criterion of getting qualified for an IVA.

Insolvency Status

In case you own assets that cost lower than your debts, then you are insolvent. But, if you can repay your debt by selling your assets, then you’re not insolvent. If your assets are worth more than your debt, then you can’t go for an IVA. And, your creditors can drive you bankrupt, if they want to.

Amount of Debt

How much do you have to owe to your creditors so that you can qualify for an IVA? When you are talking about unsecured debt, then the amount should be a minimum of £5000. Officially, there is no borderline of debt to qualify for an IVA. But, £5000 is used as a basic figure by most of the debt solution providers. If you owe less than £5000, then you can go for an alternative solution. Further, IVA is not the optimum solution for every debtor.

The Number of Creditors

If you have borrowed money from only one creditor, then IVA is not for you. To qualify for an IVA, one debtor must have at least two creditors. They should be different people, businesses, or organisations. Once your insolvency practitioner proposes your creditors, 75% of your creditors should agree to your IVA proposal. Only then, your IVA will be a success. Otherwise, it will be a failure.

Consistent Payment Every Month

The amount that you agree to pay your creditor every month can vary according to your IVA proposal. However, a minimum of £80 should be paid to your creditor to keep the IVA running. Additionally, you need to keep the monthly payments affordable. Or else, your creditors might not vote for your IVA proposal.

Regular Source of Income

To make sure that you can pay a definite amount every month, you should have a regular income. An IVA is a legally binding contract and you can’t escape it once you have signed up for this. You should have a legitimate source of income and only then, you can pay the required amount. It doesn’t mean that you should have full-time employment only. You can get paid from part-time employment, pension, regular payment from third parties, and other benefits.

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If your regular income is not up to the mark, then you can go for the lump sum or assets IVA. However, you have to convince your creditors that you are capable of contributing to the IVA.

IVA or Bankruptcy: Which Benefits your Creditors More?

After all, you need to repay them. They will find out whether they would benefit more from accepting your IVA or declaring you bankrupt. Your insolvency practitioner will set up an IVA that will try to convince them to accept the IVA. Most creditors actually agree to an IVA if the circumstances sound good. It’s up to the creditors whether they would accept your IVA or not.

Does the Location of your Residence matter? Know it from the Experts?

To qualify for an IVA, you should be a citizen of England, Wales, or Northern Ireland. Otherwise, you can’t apply for an IVA. In case you want to discover more about IVA, book our financial advice services. Our insolvency practitioner will help you with the right IVA proposal. Get in touch with us and share your financial circumstances with our experts.

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