Key points at a glance
- As a general guide, an IVA is usually considered when you have more than around £7,000 of unsecured debt.
- You typically need to owe money to two or more creditors.
- You'll usually need to be able to afford a regular monthly contribution — often around £100 a month — towards your debts.
- These are guidelines, not hard cut-offs. Whether an IVA suits you also depends on your income, assets and overall circumstances.
How much debt do you need for an IVA?
There's no single legal minimum written into law, but in practice an IVA is generally considered suitable when you have more than around £7,000 of unsecured debt. Below that level, other solutions are often a better and cheaper fit, because an IVA is a formal arrangement with its own costs.
“Unsecured” is the key word. These are debts that aren't tied to an asset — things like credit cards, personal loans, overdrafts, catalogue debt, payday loans and (in most cases) council tax arrears. Secured debts, such as a mortgage, can't usually be included.
The £7,000 figure is a widely used guide rather than a fixed rule, and individual circumstances vary. The only reliable way to know whether an IVA fits is a proper assessment of your debts, income and outgoings — and there is no charge for an initial assessment.
How many creditors do you need?
An IVA is an arrangement with your creditors, so you normally need to owe money to two or more of them. This is because an IVA is approved by a vote among the people you owe — it's designed to bring multiple debts into one plan.
If all your debt is with a single creditor, an IVA can still sometimes be possible, but other routes may suit you better. Again, it comes down to your specific situation.
See which debt solutions you could qualify for. Checking your options won’t affect your credit score.
How much do you pay into an IVA each month?
An IVA is built around what you can realistically afford, not a fixed bill. A licensed Insolvency Practitioner works out a budget with you: your income on one side, and your essential living costs (rent or mortgage, utilities, food, travel, ongoing council tax and so on) on the other. What's genuinely left over becomes your monthly IVA contribution.
As a rough guide, people often need to be able to put around £100 a month towards their debts for an IVA to work. If your budget shows there's little or nothing spare after essentials, an IVA may not be the right tool — and we'd tell you so honestly, because a plan you can't sustain helps no one.
Online calculators can only ever give a rough estimate, because your real contribution depends on a full, individual budget. A short conversation will give you a far more accurate picture than any generic tool.
What debts count towards the threshold?
Debts that can usually be included in an IVA (and therefore count towards that £7,000-ish guide) include:
- Credit cards and store cards
- Personal loans and payday loans
- Overdrafts
- Catalogue and mail-order debt
- Council tax arrears (the amount already owed)
- Some HMRC debts and benefit overpayments, depending on circumstances
Debts that typically can't be included — and so don't count — include secured loans and your mortgage, and certain other debts such as court fines and (in most cases) student loans. If you're unsure which of yours qualify, that's exactly the kind of thing we'll work through with you.
What if you owe less than the threshold?
If your unsecured debt is below around £7,000, an IVA may be more than you need. Depending on your circumstances, lighter-touch or more suitable options could include:
- A Debt Management Plan — an informal arrangement that's often used for debts over around £2,000.
- A Debt Relief Order — designed for people with low income, few assets and relatively modest debts.
- Dealing with creditors yourself — sometimes the right move; see our guide on handling your debts yourself.
Want to talk through your options?
See which debt solutions you could qualify for.
See if you qualify →How to check if you qualify
The thresholds above are a helpful starting point, but they're guidelines, not a tick-box test. Two people owing the same amount can have very different best options, because income, essential costs, property and assets all play a part.
The most reliable way to know is a free, no-obligation assessment. To talk through your options, get in touch. You can also read more about how to apply for an IVA.