An IVA doesn’t just sound like a great alternative to bankruptcy – it really is. Not only does an individual voluntary arrangement carry considerably less social stigma, involve less psychological stress and is even possible for those currently on a debt management plan. A well-prepared and successful IVA truly promises the perspective of becoming debt-free again at the end of its term and thus opens up a path towards a future without worries. Needless to say, then, professional IVA advice for those in debt is vital. After all, not everyone qualifies for an IVA and even those who do benefit greatly from careful preparation. Which is why it is recommended to take an IVA test first to see whether it is right for you.
IVA test stage one: Test your financial means
An IVA makes sense only if you are actually capable of repaying a mutually acceptable part of the original sum owed to your creditors. The idea behind an IVA is not to just write off all your debts, after all, but rather to provide for a reliable legal framework within which repayment, albeit only partial, becomes possible and attractive to both sides. So our first piece of advice with regards to an IVA would be to thoroughly test your own financial means. It is essential, for example, that you are able to pay back a fixed monthly sum. You also need be aware of the fact that although an IVA is generally – and correctly – regarded as less harsh than a bankruptcy, it is still an incisive measure. It will damage your credit rating and may make it harder to get a mobile phone contract, too, for example. As part of your personal IVA test, you should therefore first make sure that there really is no way for you to repay your debt in full.
IVA test stage two: IVA criteria
Once you’ve determined that an IVA is the right tool to fight your debt, you can already easily test some of its most basic criteria right now:
- Are your overall debts greater than ?12,000? They need to be for an IVA to be possible, since the measure is not intended as an easy way out for those with just minor debts. If they’re not, ask a professional debt management company for advice on suitable alternatives to an IVA.
- Do you have at least two lines of credit with one creditor? You need to have debts with two or more institutions to be able to reap the benefits of an IVA.
- Is your disposable income over ?150 per month? This is an essential part of an IVA test since, as mentioned, an individual voluntary arrangement is aimed at those committed to and capable of repaying at least a sizable chunk of their credit.
- Have you allowed for the necessary living expenses in your repayment plan? An IVA test frequently falters at this stage, since all too many applicants reserve next to nothing for food, clothing and travel costs. This amounts to another essential piece of IVA advice: Being realistic will greatly enhance the chances of your IVA being accepted.
IVA test stage three: Get professional IVA advice
Even if you’ve informed yourself and answered the above mentioned questions to the affirmative, an IVA remains a delicate matter. It is therefore recommended that you consult a professional debt management company for advice and make a free IVA test to determine whether or not an application makes sense.