IVA Acceptance Criteria
While there are no fixed criteria, it is important to creditors that people proposing IVA’s are demonstrating an attempt to repay as much as affordable and that the offer of repayment will give a better return in a reasonable amount of time than that of alternative options to you and your creditors.
Below we have outlined some of the factors that make for a successful proposal.
1. Where you reside
In order to be accepted for an IVA you must reside in England, Wales or Northern Ireland. Residents of Scotland are not eligible for IVA’s due to the differences in Insolvency Laws but may wish to consider a Protected Trust Deed which is considered to be the Scottish equivalent to an IVA.
2. You must be Insolvent
To be Insolvent you must be unable to meet your full contractual payments as and when they fall due and your total debt value be more than the value of your assets once any secured loans had been repaid.
If your assets are worth significantly more than the debts creditors are unlikely to accept an IVA in view of bankruptcy returning the debt owed more quickly than the IVA as assets would be sold.
3. The value and number of debts you have
You need to have at least £6,000 of unsecured debt owed to 2 or more creditors. (This does not however guarantee that an IVA would be accepted)
4. Best offer for your creditors
The IVA must offer a better return to creditors than could be expected were you to go bankrupt.
5. IVA payments must be affordable
It is importance that creditors feel your IVA repayments are affordable and sustainable for the duration of the Arrangement as to maximise the chance of successful completion and return of the agreed amount to your creditors.
While situations can change during an IVA it is essential that you can demonstrate through your income and expenditure statement from the point of proposal:
- A reasonably stable ongoing income from Employment and or stable benefits.
- A sustainable level of expenses that maintain a reasonable standard of living for you.
- Not spending excessively and are living within reasonable means.
Known significant changes to your circumstances or recent unemployment are some factors which may mean an IVA is not accepted.
6. Proving your circumstance
It is important that your circumstances are detailed honestly and accurately, not only to ensure your creditors are not disadvantaged by false or misleading information but to also ensure that the arrangement is suitable, sustainable and affordable for you.
Providing false or misleading information to obtain an IVA is also a criminal offence.
As the IVA is a legal agreement, your Insolvency practitioner has an obligation to obtain and review evidence of your affairs and you will be required to supply:
- Recent bank statement to confirm current payments – last 3 months.
- Latest statements for all unsecured credit such as credit cards, store cards, catalogues, etc.
- Mortgage statement or tenancy agreement.
- Recent wage slips – last 3 months.
- Current council tax bill, including details of arrears if applicable.
- Proof of identification.
- Award letters for State Benefits currently being received.
- Hire purchase and secured loan documentation.
Although the above acceptance criteria is a helpful guide to understand whether it is something you may be able to obtain, you can never really know until a full review has been conducted with one of our highly trained team.
Subject to eligibility and acceptance. Fees Payable. Debt write off applies to unsecured debts only and on successful completion of an IVA. If your IVA fails, it could lead to Bankruptcy, although this is rare and alternatives may be available. Your ability to obtain credit will be affected for the medium to long term. Homeowners may be required to release equity in their property, subject to certain criteria. If unable to release equity and equity is available an additional 12 months payments may be requested in compensation.
Financial Support Systems provides insolvency solutions to individuals, specialising in IVAs. We do not administer or provide advice relating to debt management products, such as Debt Management Plans. Advice and information on alternative options will be provided following an initial fact find where the individual(s) concerned meets the criteria for an IVA and wishes to pursue it further, as governed by our Insolvency Practitioners' regulators, the Institute of Chartered Accountants in England and Wales. All advice given on any alternative options is therefore provided in reasonable contemplation of an insolvency appointment.
The Money Advice Service is a free service set up by the Government to help people make the most of their money. If you would like to learn more click here.
The Association of Business Recovery Professional, known as R3, produce a booklet called "Dealing with money worries - A guide to your options". This is a very helpful summary of the various options for dealing with debt and a copy can be found at the following link. Please also see link to 'Voluntary Arrangements - A Guide for Creditors on Insolvency Practitioner Fees'.