Individual Voluntary Arrangements are pretty flexible, but there is a typical set of requirements for an IVA to be likely to go ahead. IVAs are for personal unsecured debts, and do not usually cover secured debt such as mortgages, although an IVA may be used as one measure in reducing the financial strain of multiple debts.
Debts
In general, your personal unsecured debt (for example from credit cards) should total at least around £15,000. This debt will normally be owed to at least 3 different lenders, and cannot be different debts to the same lender (e.g. a credit card and loan to the same bank would count only as a single lender). When you propose an IVA, you must make sure you have passed the relevant details of all of the debts you wish to include to your IP. The amounts outstanding together with account details such as the creditor’s reference for your account with them are typically required.
Payments
In order to get an IVA, you need to be able to demonstrate that you can make the monthly payments required. It is generally the case that these payments will not amount to less that around £200 per month. An alternative to this may be if you have assets that you can release, or if some third party is making a contribution towards the IVA.
If your income is not sufficient for you to make payments towards the IVA while still having enough to live on, or if your income is too unpredictable, then your IVA may not be accepted. Your IP will have a good thorough look at your finances, taking into account your income, outgoings, assets and total debts (secured and unsecured). This will allow them to best advise you on how to handle your debt situation. If they do advocate going for an IVA, they will include comments in your proposal to this effect.
IVAs are a genuinely useful tool in helping people in the right circumstances to get a handle on their finances. However, IVAs can only work where the right proposal has been arrived at. If you cannot meet the monthly payments required, then your IVA is far more likely to fail, leaving you potentially exposed to legal action for unpaid debts. Providing you get the right proposal together with the help of your IP, an IVA can help you to work towards better financial health in the future.