It’s difficult to say whether or not an IVA (Individual Voluntary Arrangement) is the right choice in any one person’s circumstances. However, your income will be one of the deciding factors in whether an IVA is a realistic option.
If your debt situation is such that bankruptcy is a possibility, an IVA can help to avoid this, but only in the right circumstances. If you are long term unemployed or sick, then the chances of using an IVA will be slimmer. To carry out an IVA, you need to be able to demonstrate that you can make the required payments.
Your income
When you explore using an IVA, you will be consulting with an Insolvency Practitioner (IP). The IP will look at your income, from employment and any other sources. You may need to provide payslips to prove the income that you get from your job. They will also look at any assets you have, such as a home, car or other property. If these have been financed using mortgages or loans that are not yet paid off, you will also need to provide details of this.
Outgoings
The IP will also look at your outgoings, as well as all of your debts. They will weigh up this information and make a judgement about whether you can in fact afford to make payments towards an IVA. It is generally the case that you will be required to pay at least £200 per month towards your IVA debt for the agreement to go ahead. You should be able to make this payment while still having enough left over to live on.
If your IP agrees that an IVA is going to be a good option for you, they will include their comments on your IVA proposal for the creditors to consider.
If you have sufficient regular income, for example from employment, then an IVA can indeed be an effective tool in settling debts that are currently unmanageable. However, if you are not in long-term employment, you may be advised to consider other options such as bankruptcy.
A licensed IP is in the best position to advise you in any of these situations, as they can give you a rundown of what your options are, as well as informing you of the long term implications of each. It’s impossible to say what options are going to be available to any one person, but professional debt experts are well placed to do this with the right information about your case.