Published in on Saturday, February 28 2009 by Ideal Debt Solutions
What are the exact criteria required to accept an IVA (Individual Voluntary Arrangement)?
For an IVA to be accepted, the main single criterion is that you are offering your creditors more than what you would be able to offer that if you were to go bankrupt. But there are many more factors to consider.
IVAs are designed to help people who are in debt but wish to avoid bankruptcy. An IVA is a contractual arrangement with creditors which offers the simplicity of a repayment arrangement between yourself and your creditors and which is legally backed.
IVAs last for a maximum of five years. You can include debt to banks, finance companies, credit cards, HM Customs & Excise (VAT), Inland Revenue, and loans made by your friends or family. Debts that can’t be included are mortgages, hire purchase, student loans, fines, debt incurred through fraud, maintenance and child support arrears.
The major banks tend to leave the decision of whether to accept an IVA application or not with professional representatives of large accountancy firms.
The Criteria
IVAs are mainly aimed at working people who have total debts over £15,000 owed to three or more creditors. Note that the three creditors must be from completely separate organisations.
You’ll also need disposable income of over £200 per month (which usually necessitates a reasonably regular and steady stream of income and the ability to show you have allowed for necessary living expenses such as food, utilities and Council Tax etc) as well as assets to release or a third party to contribute into the arrangement. And you must be able to pay your creditors at least a 25p in the £1 dividend.
If these criteria are met, your licensed insolvency practitioner will be able to make a positive “Nominees Report” which is a professional opinion as to whether your IVA is a bonafide offer.
Of course, it may be that your adviser isn’t able to recommend an IVA for good reasons – but that there are other options available to you such as a debt management plan, or bankruptcy, so always seek expert advice.