How much debt can be written off with an IVA?
Summary: This article will review the amount and type of debt that can be included in an IVA, as well as some of the debt that may not be included.
The answer to this question is not necessarily as clear cut as giving a simple figure. In order to qualify for an Individual Voluntary Arrangement (IVA) a debtor must have unsecured debt in the region of £12,000 or more. There usually needs to be at least 3 lines of credit (e.g. unsecured bank loan, credit card, store card would be 3 lines) but there would normally need to be at least 2 or more creditors.
Is there a cap on the amount of debt that can be included?
While there is certainly a minimum amount of debt that qualifies for an IVA (as above), there is no limit to how much can be included, provided it is unsecured and meets the criteria of debt inclusions laid out below.
Can certain debts be excluded from an IVA?
Unless it is a debt that would not usually qualify to be included in an IVA (such as a mortgage), then it is not possible to exclude a debt. This is because one of the key principles of an IVA is that all creditors are treated equally and fairly. By excluding a debt and continuing to repay the agreed monthly repayments, it is likely they will be getting a preferential rate of interest, which would be unfair to the other creditors.
What debt can be included in an IVA?
• Any unsecured debt, such as bank loans, credit cards and overdrafts
• Store credit cards and loans
• Buy now pay later offers
• Pay day loans
• Utility bill arrears accrued from a previous residence
• Outstanding tax bills
• Loans from family and friends
• Hire Purchase agreements on goods no longer required
• Rent arrears (from a previous address only)
What debt cannot be included in an IVA?
• Mortgage repayments (this is a secured debt)
• Any form of secured debt
• Child support and maintenance
• Student Loans
• Hire Purchase agreements on goods still required
• Court fines
• Parking fines
• Student Loans