IVA Eligibility: Who Can Get an IVA?

The short answer

You can usually get an IVA if you owe a significant amount of unsecured debt, can afford a steady monthly payment for several years and live in England, Wales or Northern Ireland. Scotland has its own equivalent, called a trust deedDebt Help in Scotland and Northern IrelandHow debt solutions and advice differ in Scotland and Northern Ireland, including trust deeds, the Debt Arrangement Scheme, DROs and where to get free help.Read more →. The arrangement must be put to your creditors and approved, and GOV.UK says it starts if creditors holding 75% of your debts agree. So the real test is whether your proposal is acceptable to the people you owe, not whether you meet a fixed checklist.

The typical criteria

Practitioners look at several things, and the exact thresholds vary between providers.

• Level of debt: Most providers expect a substantial amount of unsecured debt, often several thousand pounds at the very least. Below that, cheaper options usually make more sense.
• Number of creditors: An IVA is normally used where you owe money to more than one creditor. A single debt is usually better dealt with by negotiating directly.
• Regular income: You need enough money left over after essential spending to make a worthwhile monthly payment. Providers often look for a minimum of around £100 a month, but this varies.
• Type of debt: IVAs cover unsecured debts such as credit cards, loans, overdrafts and catalogue debts. Secured debts, such as a mortgage, are not included and must still be paid.
• Where you live: IVAs are available in England, Wales and Northern Ireland. Scotland uses trust deeds.
• Proof of finances: You must be able to document your income, spending, assets and debts honestly and in full.

Debts an IVA can and cannot include

An IVA deals with unsecured debts that are owed when it starts. Some debts are treated differently, and it is worth being clear about them before you apply.

• Usually included: Credit cards, store cards, personal loans, overdrafts, catalogue accounts, payday loans, many council tax arrears, utility arrears and county court judgments.
• Not written off in the same way: Court fines, child maintenance arrears and student loans are generally outside an IVA, and secured debts such as a mortgage must continue to be paid. Your adviser can check each debt.
• Debts you incur afterwards: New borrowing during the arrangement is usually not allowed without permission.

Who is usually turned away

Providers and creditors will often decline an IVA when it is clearly not workable.

1. Your debts are low enough that a cheaper solution fits better.
2. You have no spare income, in which case a Debt Relief Order or bankruptcy may suit you better.
3. Your income is unstable and you could not guarantee payments for five years or more.
4. You have little hope of keeping up the commitment because your essential costs are rising.
5. Creditors holding a large share of your debt are unlikely to agree, for example where one creditor has most of what you owe.

What you will need to provide

Be ready to share a full picture of your finances. You will normally need recent bank statements, payslips or proof of benefits, a list of every debt with the creditor name and balance, details of what you own (including your home, vehicle and savings) and a detailed budget of your essential spending. Hiding assets or income can lead to the arrangement being cancelled and, in serious cases, to criminal charges, so be completely open.

Homeowners, self-employed people and benefits

Your situation affects how an IVA is set up. Homeowners may be asked to release equity near the end of the arrangement, which is explained in our guide to IVAs for homeowners. Self-employed people can still qualify, with payments based on profit, as covered in our IVA for self-employed guide. And if you rely on benefits, read about IVAs and Universal Credit because benefit income usually leaves little room for a worthwhile payment.

Check your options first

Before you speak to any company that sells IVAs, speak to a free adviser. They can tell you honestly whether you meet the typical criteria and whether another solution would cost less or work better. Our guide to free debt advice in the UK lists where to go. For the full picture of how the arrangement works, read our guide to the Individual Voluntary Arrangement.

A quick self-check

Before you speak to anyone, run through five questions. Do you owe money to more than one creditor? Is most of your debt unsecured? Could you pay a meaningful amount every month for at least five years? Is your income reasonably stable? Have you looked at cheaper alternatives? If you answer yes to most of these, an IVA may be worth exploring. If you answer no to several, the free options in this guide are likely to suit you better. The self-check does not replace advice, but it tells you what to ask.