Store cards, credit cards, personal loans, and other consumer credit debts are included in typical Individual Voluntary Arrangements (IVAs). A relatively small number of lending institutions provide this credit and most base their IVA approval decision on standard criteria. This information serves as general guidance regarding the criteria most likely to be accepted by a creditor included in an IVA proposal.
An IVA is only available in the UK and is not available for residents of Scotland. The Standard Trust Deed is the related debt management tool in Scotland. Residents of Northern Ireland, Wales, and England who are currently working or living abroad are usually eligible to apply for an IVA.
Amount of Debt
The typical minimum amount of debt required to use an IVA is £12,000. People with a smaller amount of debt should explore different debt management solutions.
An individual must usually be insolvent in order to use an IVA. Insolvency is defined as the inability to make agreed payments on debts. People should never use an IVA to avoid repaying debts in full.
Providing Proof of Circumstances
An IVA proposal is based on information regarding monthly expenses, income, and assets. Evidence of this must be provided using recent bills, payslips, and asset (including property) valuations.
Debtors must prove that they can afford the agreed IVA payments over the stipulated period. The Insolvency Practitioner and creditors will attempt to confirm this. Therefore, the debtor should have stable employment, allocated enough money for living expenses, and considered expenses created by situations that are likely to occur in the future.
An individual must illustrate that spending during the IVA period will not be excessive and that payments made toward the IVA are as high as possible. This may require reducing tobacco, alcohol, and entertainment expenses, cutting back the satellite TV or mobile phone plan or moving to a less expensive residence.
An IVA proposal usually must include assets that could be reasonably sold or from which money could be extracted. This may include savings account balances, investments, a private pension, equity in the property, and a valuable automobile.
An IVA Protocol has been developed by the government, IVA sector, and major creditors. Our company complies with this protocol. It is usually difficult to negotiate returns less than ten per cent, but it is not impossible. In special cases, a creditor may accept only 25 percent. A creditor will rarely approve an IVA that provides less than 30 percent of the balance due and a figure of 50 percent is most typical.
The Insolvency Practitioner is required to report suspected deceit by the debtor. This individual also must also speak up if he or she believes the IVA will fail. Therefore, it is important, to be honest throughout the five-year IVA period.