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How much debt do you need to qualify for an IVA

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Every year more than 60K people in the United Kingdom use an Individual Voluntary Arrangement (IVA) to tackle debt issues. 

Oftentimes it is referred to that an IVA is a way to consolidate your debts and can make you completely debt-free for the future.

IVA Criteria: Who can qualify for an IVA?

Before going any further, always keep in mind that the criteria for IVA Help approval is not fixed. It solely depends upon the ‘scale of approval’. 

All in all, the creditors should approve the IVA advice for its execution.

An Insolvency Practitioner (IP) will consider the client who meets the following IVA criteria:

  •         Insolvent
  •         Minimum debt of £5000
  •         Minimum 2 creditors
  •         A fixed income
  •         Minimum £80 per month payout ability
  •         Must be a resident of England, Wales or N. Ireland

If the requirements of the criteria are met, there is a chance of being approved for an IVA. 

Are You Insolvent?

It simply means that you aren’t able to return the money you have borrowed in stipulated time, and the debts have become bigger than the value of your assets. 

Debt you have on you?

To stand eligible for an IVA at least £5000 in unsecured debt is mandatory. Although, there is no set minimum debt level mentioned in the books. If the debt level is lower than £5000 then a case-by-case decision will be carried out based on your situation – you can either be suggested to go and apply for an IVA, or an alternate IVA help plan will be encouraged.

One gets the option generally to add most of the debts in their IVA proposal. You can easily include your priority debts such as tax debts, council tax arrears, etc. Always remember, there will not be an option to include mortgage, court fines, or child maintenance/support. 

Number of Creditors in your kitty

A credit is considered when a lender gives any amount of money to you. This lender can also be referred to as a creditor. 

To qualify for an IVA – 2 creditors is a must.

Once the IVA process starts, your IP will make a proposal on your behalf. This proposal will only become a formal document only if 75% of your lenders agree to the presented proposal.

A Regular Income source is there?

‘Can I apply for an IVA if I am jobless?’ – the most common question which comes in a client’s mind.  

An IVA is a full proof legal debt solution, so you must not skip any regular monthly payments as part of the arrangement. An IVA will not get approved if there is no regular source of income to make the repayments installment. 

The income could be from: 

  •         full-time employment
  •         part-time employment
  •         benefits
  •         pension
  •         a regular help from a third party

 

On successful IVA help, it is monitored & reviewed every 1 year to make sure that it’s still feasible with your situations. Having a regular source of income by your side will ease concerns about repayments months into the future. 

All in all, creditors must believe that: 

  •         you have a stable income 
  •         repayments are made without affecting your essential needs
  •         no extra expenditure is made on your part

is it okay to pay £80pm into an IVA?

If you are comfortable in repaying a minimum of £80 per month into your arrangement, you are good to go for IVA help.

There is no upper fixed limit of repayment; it can go up to your capability. This solely depends on you and your sole jurisdiction and what is realistic for you.

In the process of IVA advice, Insolvency Practitioner (IP) will help to govern the financial situation and look for a feasible option. All the declarations made must be honest, otherwise to qualify for an IVA will be a dream.

The amount decided for the repayments of the long-term, as the monthly repayments must be made without fail, even if personal situation changes.

Does IVA give a better return to your creditors?

If the arrangement is made & the creditors are in agreement to help you go debt-free after certain years, they will only do this if the deal offered is better.

There’s no option other than this. Creditors are the one who agrees on IVA proposal, and if only they find it feasible then it will be approved.

IP will formulate the IVA help proposal making it more appealing to the creditors than bankruptcy, and they will accept the proposal laid out to them. 

As IVAs are not heavily marketed in the world as compared to bankruptcy, still the insolvencies can be checked with the help of a search function in Insolvency Register online.

Are You a resident of England, Wales or N. Ireland?

It is mandatory for the client to be living in England, Wales or Northern Ireland to state the candidature to go for an IVA help.

For example, people of Scotland cannot apply for IVA, they can always apply for similar IVA Advice known as Trust Deeds.

What can be treated as Evidence?

If you are able to prove your eligibility to qualify for an IVA and have evidence to prove so, you’re good to go for an IVA help.

If for a minute let’s say you are eligible. What do you require now?

All personal information needs to be provided to generate the IVA proposal, make sure to always go for the best IVA companies, there will be no trouble in terms of data protection, privacy, or confidentiality.

Below are the mentioned documents for reference:

  •         Identification proof
  •         Three months’ pay slips (if applicable)
  •         Three months bank statements
  •         Council tax bill
  •         Contact details of all the creditors
  •         Income proof and expenditure
  •         Information about the house
  •         Assets holding significant value

 

Apart from this, a credit file check will carve out all the outstanding debts.

So after meeting the eligibility criteria you can opt for the Stepchange IVA Advice. You can start the process according to your wish.

 

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