How much debt do I need to have for an IVA?
Quick Answer: Generally, you need at least £6,000 in unsecured debt owed to two or more creditors.
While there is no legal minimum debt requirement for an IVA, in practice most Insolvency Practitioners require you to owe at least £6,000 in qualifying unsecured debts. Some IPs may set a higher threshold of £10,000 or more.
The reason for this minimum is practical: an IVA involves professional fees and administrative costs. If your debts are very small, the costs of the IVA may not be proportionate, and a simpler solution like a Debt Management Plan (DMP) or Debt Relief Order (DRO) may be more appropriate.
You must also owe money to at least two separate creditors. This is because an IVA requires a vote of creditors, and having only one creditor makes the process less meaningful.
The types of debt that can be included are unsecured debts such as: credit cards, personal loans, store cards, overdrafts, catalogue debts, payday loans, and in some cases, HMRC debts.
Debts that CANNOT be included in an IVA are: mortgages or other secured debts, student loans, court fines and penalties, child maintenance arrears, and social fund loans.
* This information is for general guidance only and does not constitute financial advice.