Thanks for the question. It is certainly possible to do an IVA even if your only income is benefits. What’s more important is your disposable income – that is what’s left of your income once you’ve set aside enough to cover your key outgoings such as rent, utilities, travel, household living costs and so on. The “remaining” income needs to be sufficient that your lenders – the people you owe money to feel they are going to get enough of a return. If you speak to an adviser they will run through your income and expenditure in detail to help you work this out, as it has to be affordable for you.
An IVA is a fairly long term commitment – usually five years, sometimes more. Obviously your benefits might fluctuate over the period and your IVA should be able to accommodate this. Bear in mind if you are able to start work at any point and your income increases your creditors are likely to want you to increase your IVA contributions if your disposable income increases.
An IVA can be a useful way of paying off your debts if you have assets such as a home. In most IVAs you won’t have to sell your house (for example), although you may need to remortgage or extend the IVA term, depending whether equity is available in the final year. If you don’t own a house or have other significant assets then there may be other debt solutions that would work better for you. For example if your debts are less than £15,000 you may qualify for a Debt Relief Order (DRO), an alternative to bankruptcy. This has a one off cost of £90 and you can clear your debts after one year. Although it might seem scary bankruptcy might even be an option for you. If you were to go bankrupt you would be debt free quicker than via an IVA and you might not need to pay in any of your income. Of course IVAs, DROs and bankruptcy are all big steps and are forms of insolvency so they will damage your credit record and you may not be able to borrow money for some time afterwards.
As you can see, you may have various options available each with their own pros and cons, the main thing is finding the solution that’s best suited to you and your needs.