Can I get an IVA if I`m unemployed?

20 October 2009

If your debt problems have become so serious that you can`t see yourself repaying your debts within a reasonable period of time, you`ll want to find a debt solution that can help you to clear as much of your debt as possible.

Some people may automatically think of bankruptcy in this situation - and in some cases, that may be the best option. However, for many other people, an IVA could be a more appropriate alternative.

How does an IVA work?

An IVA is a legally-binding agreement between you and your lenders in which you`ll repay an agreed percentage of your unsecured debts, after which the remaining amount will be written off.

This normally involves you making monthly payments towards your debts over a five-year period (although timescales can vary). These payments will be based on how much you can afford after all your essential costs (e.g. mortgage or rent, food costs, essential transport, etc.) have been accounted for.

On successful completion of the IVA, you will be legally debt-free.

Other things to consider

Remember that an IVA is a significant financial commitment that will leave you with very little spare income each month.

You may be required to give up most of any increase in income received during the IVA, and if you`re a homeowner, you may be expected to release some of the equity in your home in the final year of the IVA.

Plus, an IVA will have a significant impact on your credit rating, and this will affect your ability to get credit for the six years it stays there.

I`m unemployed - is an IVA suitable?

Because an IVA involves committing to regular monthly payments - usually at least £200 a month - you must have a certain level of disposable income available to put towards your debts each month. This means that if you`re unemployed, an IVA is highly unlikely to be suitable.

In this case, another debt solution such as bankruptcy or a Debt Relief Order might be more appropriate.

If you`re struggling and want to know more about IVAs or any other debt solutions, call 0800 074 8639.

Back to debt consolidation blog home