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Can I get an IVA if I'm retired?

Posted 11 January 2016

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Heading into retirement can be a difficult process, especially if you're concerned about your finances. An IVA may be a suitable way to make sure your debts don't get the better of you, but there are a few things to remember.

We can’t always control what happens to us in life and sometimes circumstances mean that we find ourselves in financial difficulties. An unexpected expense, a death in the family, illness or divorce can launch you into a situation that you weren’t financially ready for. If this is you, and you’re retired, it’s understandable that you might be worried about how you’re going to tackle your debts without that income from work.

One of the debt solutions that’s available to help (at least to people who live in England, Wales and Northern Ireland – read about solutions for Scottish residents here) is an IVA – an Individual Voluntary Arrangement.  But, whether it’s suitable for you or not would depend on your circumstances, so let’s have a look at when an IVA might be the right step for if you’re retired and struggling with your debts.

What is an IVA?

An IVA might be suitable if you have unmanageable unsecured debts (like personal loans or credit cards), and you don’t think that you can pay them off in a reasonable amount of time. It would change the payment arrangements you currently have with your lenders so that as well as having enough money to live off each month, you’d make a smaller repayment towards what you owe. And, after a certain length of time any remaining debt would be written off (normally after five to six years). If this doesn’t sound right for you, then don’t worry, there are other debt solutions available, click here to learn more.


However an IVA is a form of insolvency and not an easy option. It would mean that you’ll have to make changes in your lifestyle until your IVA finishes. But, it can provide a real lifeline, if your debts have become completely unmanageable. If you are in the later stages of life and want to look forward to a date that you could be debt free, this could be the right solution, as long as you meet certain criteria.

Can I have an IVA?

There is no age restriction on IVAs, so you wouldn’t be rejected just on the basis that you’re retired. However, you do have to make a regular monthly payment into an IVA so you need some form of income.  Typically this would be a private or occupational pension (on top of your state pension), but it could be another source of income, such as from renting a property out.  We’d have a look at the money coming in and out and take into account what you need for living expenses. After everything has been accounted for, the money that’s left is called your disposable income, we’d work out what you could afford to pay into an IVA from that left-over portion.

Is the payment sustainable long-term?

If you’re working now, but due to retire in the next five years, we’d have to look carefully at whether an IVA would be a good idea for you or not.  We wouldn’t want you to start an IVA, only to struggle even more later on, and potentially end up in an even worse situation than you were in to begin with. But don’t worry, the fact that you’re due to retire shouldn’t be a problem in itself, we’d always work out the best solution for you. If you’re coming up to retirement we’ll also check whether you’re due to get a lump sum from any pension – this can sometimes make the difference between an IVA being the right option or not.

Releasing Equity

If you were to go ahead with an IVA, and you own a house, you may be required to release equity from your property in the last year (normally the 54th month) of the IVA. This is to make sure that as much money as possible can be put towards your unsecured debts. If this were to happen, it would raise your monthly mortgage repayments or extend the term. So before deciding on an IVA, it’s really important to look ahead and make sure that your income in retirement could cope with that increase in repayments.

You wouldn’t be expected to release equity if the re-mortgage term went beyond the later of your state retirement age or your current mortgage agreement. So if you had already reached state retirement age and your current mortgage was over, then you would not be expected to re-mortgage. However, if you had reached state retirement age and you still had a few years to go on your current mortgage then you may be expected to release equity. If these situations applied to you, or you simply couldn’t release equity from your home, then the IVA would just be extended for a further 12 months and you’d continue paying into it as normal.

So to sum up, an IVA can be the right solution for you when you’ve retired, but only if your circumstances are suitable and you’ll have enough income from your pension (or other sources) to cope.

Do remember that all debt solutions have both good and bad sides. You may find that something else is much more suited to your current financial situation, like bankruptcy or a debt management plan.  If you’re still unsure about whether it’s right for you, have a look through our page just on IVAs. Remember, we’re just a phone call away and always happy to talk you through any specific questions you have. Use the options to the left to get in contact.




by Christine Walsh

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