Can I get an IVA if I'm unemployed?

An IVA (Individual Voluntary Arrangement) can be a very effective way of tackling unsecured debt if you find yourself unable to repay what you owe. However, your eligibility for an IVA will usually also depend on your ability to maintain regular monthly payments - so if you're unemployed, it's likely to be out of your reach.

Having said that, being employed isn't the only way someone can have a reliable source of income. If you can afford to repay a reasonable proportion of your debts, an IVA could still be the right way forward for you.

If not, there are other options that could help.

What's involved in an IVA?

A typical IVA involves making regular contributions to your unsecured debts, based on what you can afford alongside your other essential costs. This usually lasts for five years, and at the end of this time your remaining unsecured debt will be written off - as long as you've stuck to your side of the agreement all the way through.

As long as you do, you will also be legally protected against further action from your lenders during your IVA.

By now, it should be clear that you'll need to have access to a regular income to maintain this kind of IVA. However, if you have no means of making regular payments but you do have a lump sum of money available, your lenders may accept this as a settlement if they think it enables you to repay a reasonable portion of your debts.

Note that entering an IVA will have a significant impact on your credit rating, and that you may be required to release equity if you own property.

What are my options if an IVA is out of reach?

If an IVA isn't right for you for any reason, your next option may be bankruptcy. It's important to note here that although bankruptcy is often considered a last resort, it can actually be a better option for some people's circumstances than an IVA.

Alternatively, if you are unemployed or on a very low income and have little to offer in the way of assets, you may be eligible for a Debt Relief Order (DRO) if your debts aren't too high. A DRO protects you against action from your lenders for one year, and if your circumstances haven't improved by the end of that time, your unsecured debts will be written off.