Am I Suitable for an IVA?

An IVA provides a great way for debts to be paid off over a set time period, and a lot of debt can often be written off. However, it still requires careful consideration before you decide to go ahead with one.

You should always seek professional advice from a debt agency or a charity such as the Consumer Credit Counselling Service (CCCS) before making the decision, as they will examine your personal situation and will be able to advise you on whether it is the right course of action for you to take.

There are certain requirements that have to be taken into account for anyone wishing to enter into an IVA. The exact conditions vary between agencies, but it is usually stipulated that you need to be over £15,000 in debt and owe money to at least three different creditors before you can go ahead with an IVA. This is only a guideline, but if you do not fit these requirements then another form of debt management may be a better option for you.

If you are considering taking out an IVA, you will almost certainly be experiencing difficulties in paying back all of your separate creditors. However, you have to remember that after taking out an IVA you will still be required to make monthly payments, even though these are likely to be smaller. The general condition is that you will have to be able to afford to pay back around £200 a month in repayments, but again this is flexible depending on your financial circumstances, and payments can sometimes change throughout the course of the IVA.

As with many other debt repayment schemes, the types of debts that you have are also relevant. The IVA is only suitable for unsecured debts, meaning any loans that are not secured against the value of your house or car. For example, credit cards, store cards and overdrafts will all be covered. If you have secured debts, or other debts such as council tax arrears and rent, then these will not be covered and an IVA is not going to be the solution for you.

Although the IVA is often a preferable course of action to going bankrupt, it does come with some disadvantages. To start with you will be on the programme for five years, and you will also have to pay back considerably more of your debts than you would have to if you went bankrupt. The decision therefore has to be taken in regards to your personal financial situation.

If you own a property, the IVA is often a preferable alternative to bankruptcy because you will be granted greater control over it. However, you should be aware that any equity you have on it may have to be released as part of the agreement.