Who can enter into an IVA?

If you were to ask an IVA advisor ‘who can enter into an IVA’, more often than not, they’ll tell you that you must owe £15,000 or more in unsecured debts, have three or more creditors and that you can afford to pay £200 towards your unsecured debts each month.

The truth is that none of these are legal criteria for entering into an IVA. They are actually general rules of thumb that the industry uses to determine whether or not your creditors are likely to accept your IVA proposal or not.

The main criteria that your creditors will use to evaluate your IVA proposal are:

• The return to your creditors in an IVA beats the return in Bankruptcy.
• The amount of money you’re pledging to return to your creditors over the life of the IVA must achieve the minimum creditor dividend (this is amount of money the creditor receives as a percentage of the total amount of debt that is owed). As a general rule, this is around 15%, although it can vary depending on factors such as the size of debt, the return in Bankruptcy and how quickly the creditors will see their money.
• You must be a resident of England, Wales or Northern Ireland.

Debt Advice Foundation is a registered UK charity offering free, confidential support and advice on any aspect of debt. You can read more about IVAs and whether they are suitable for your situation in our IVA section. If you need to talk to us about IVAs, please call 0800 043 40 50.