IVA Criteria

Criteria to qualify for an IVA

Most IVA (Individual Voluntary Arrangements) are made up of consumer credit debts such as credit cards, personal loans and store cards. These are provided by a fairly small number of institutions and it’s increasingly true that most of them apply standard criteria to what they will or will not accept in an IVA proposal.

This page is a general guide only, but it shows you what sort of IVA proposals are likely to be acceptable to the people you owe money to.

Where you live
IVA is not available in Scotland or outside of the UK. Scotland has a similar mechanism called the Standard Trust Deed. If you are normally a resident of of England, Wales and Northern Ireland but are currently living or working abroad, you can apply for an IVA.

Financial problems
Generally, a debtor has to be insolvent: unable to keep up agreed payments on a debt such as a credit card or loan. An IVA should not be used as a mechanism to avoid paying back debts in full.

Debt size
£12,000 is the usual minimum debt for an IVA. Below this amount, other debt solutions apply.

Minimum dividend
The IVA industry, Government and major lenders have agreed an ‘IVA Protocol’. ClearStart fully complies with this protocol and was instrumental in it’s development. As a consequence Clear Start benefits from not having any formal minimum returns on it’s IVA.

In practical terms returns below 10% are more difficult, but not impossible to negotiate. Creditors rarely accept an IVA that gives them back less than 30% of what they are owed. In exceptional circumstances they accept as little as 25%. A figure of 50% is more typical for most IVA.

Affordable payments
You’ll need to show that agreed IVA payments would be be affordable for the required period. Your creditors and the Insolvency Practitioner will also try to confirm this. Typically you’ll be in stable employment, with enough money allowed for living expenses, and you’ll have given thought to any likely and significant future events.

Living expenses
You’ll need to show that you will not be spending excessively and you will be attempting to maximise the payments into the IVA. Some of the more common compromises include cutting down on social expenditure, alcohol and tobacco, moving to less expensive accommodation and reducing bills such as mobile phone or satellite TV.

Significant assets
You will normally have to include assets you could reasonably sell or extract money from in the proposal. That might include equity in a property, funds in a saving account, private pension or investments and also assets such as a valuable car.

Honesty
The Insolvency Practitioner (IP) has to report any suspected attempts to deceive, or if he/she believes the IVA will not succeed. Because an IVA is a five-year commitment, complete honesty is important from the start.

Proof of circumstances
Your proposal for an IVA is based on information about your assets, income and monthly expenditure. You will need to provide suitable evidence such as payslips, recent bills and property valuation (if applicable).

Further reading
IVA Help | How an IVA works? | IVA Costs | IVA Criteria | IVA Approval Process | How to Start IVA | What Is an IVA? | IVA FAQs