Summary: This article reviews the criteria for IVA acceptance as well as the type of debt that can be included.
In today's economic climate, many are feeling the pressure of debt and it is not uncommon for some to turn to family and friends for financial help. But the burden of repayments become too much, what can be done? An Individual Voluntary Arrangement (IVA) has long been a popular solution to those with more than around £12,000 of unsecured debt, owed to 2 or more creditors. A rule, they must have 3 or more lines of debt (e.g. a credit card, a loan and an overdraft) and the must be insolvent (i.e., income is not sufficient to cover essential monthly expenditure and debt repayments). The IVA must also be agreed to creditors of at least 75% or the total debt. Assuming these criteria are met, any unsecured debt can be included, even if it is from family or friends
What debt can be included in an IVA?
As mentioned above, all unsecured debt can be included such as:
• Credit cards
• Bank loans
• Outstanding utility bill debt from previous properties
• Tax debt
• Any owed shortfall on previous Hire Purchase agreements
Debt that cannot be included is as follows:
• Secured debt, such as a mortgage or secured loan
• Hire Purchase agreements (as the item purchased will usually be repossessed)
• Student loans
• Parking fines or outstanding court fines
• Child support and maintenance
If I include debt owed to family in an IVA would they vote at the creditors meeting?
As long as such debt is included within the IVA, the family member or friend would be entitled to vote along with all the other creditors. However, the creditors may ask them to step aside at the meeting for the benefit of the other creditors.