Do I Qualify for an IVA?
  To qualify for an IVA, your debt needs to be at least �20000 (there is no upper limit). Also, you need to be able to afford the monthly payments.

The amount of your monthly payments will depend on two things: how much you owe, and how much you can afford. To find out the exact figure, consult a professional Debt Advisor such as those at Vincent Bond & Co Ltd. As a rule of thumb, however, if your debts are below �32000, you would need to pay at least �300 per month. Where your debts are higher than �32000, you would need to contribute more.

The only exception to this rule is when you have a lump sum that can be released and contributed towards your IVA – in such a case, your monthly payment may be reduced. However, it is important to remember that from the Creditor’s point of view, you are agreeing to offer them as much as you can afford – not simply paying the minimum and keeping any extra money to yourself!

Therefore, a Debt Advisor would sit down with you and work out exactly how much money you could realistically spare each month – no more and no less – and that would be the amount you would offer towards your IVA. Furthermore, if your circumstances change for better or worse over the period of your IVA, you are obliged to contact your Insolvency Practitioner to reassess your case, and your payment plan may be adjusted accordingly.

It is important to note that your Debt Advisor will view your monthly spending realistically when working out how much your IVA payments will be. They will be careful to leave you enough to live on, without cutting any corners. The reason for this is that if you make dramatic cutbacks in your spending, it is unlikely that you will be able to maintain such a frugal lifestyle for the period of the IVA.

If an emergency happens and you are left with an expense, you will miss a monthly payment and your IVA will fail, leaving you no choice but to go bankrupt. And remember – even if you feel sure that you can maintain a frugal lifestyle, your Creditors may not agree. Therefore it is important to be honest and realistic when assessing your finances in the initial stages.

Having said that, the IVA is a fairly flexible arrangement and allowances are made for unforeseen emergencies. For example, if you are suddenly made redundant, the first thing you would do would be to notify your Insolvency Practitioner.

Your Insolvency Practitioner would then contact your creditors and negotiate a ‘payment holiday’ on your behalf, allowing you to get yourself back on your feet before resuming your IVA payments. If a more serious emergency arises, further negotiations may be made. However, if you do not keep up your payments without a good reason, your IVA will fail and you will be made bankrupt.

In summary: during your IVA period you will definitely have a reasonable amount of money to live on, but you will not be living in the lap of luxury. If your IVA is professionally handled, it should be a smooth and relatively painless. For many people, an IVA is a real life-line – without it, their situation would have been very difficult indeed.

For more information see:
IVA Helpline  


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