If you’re considering an IVA, individual voluntary arrangement, a key question you’re likely asking yourself is how much it will leave you to live on each month.
There’s a simple answer and a more complex answer to that.
The simple answer is more than you would have if you were struggling with all your bills.
The more complex answer is what follows.
An IVA is about money but isn’t all about the money. It’s also about lowering stress, reducing worries and providing a clear path to a more sustainable future.
While the nuts and bolts of it is financial, the benefits go far beyond.
How much money does an IVA give you to live on?
The amount of money you will have left to live on after an IVA will depend on a number of factors, including:
- The amount of debt you owe
- Your income
- Your essential living expenses
- The terms of your agreement
In general, you will be expected to make a monthly payment which will be a percentage of your disposable income.
The amount of disposable income you have will be calculated after your essential living expenses have been deducted.
Your essential living expenses will include things like rent or mortgage payments, food, bills, and travel.
IVAs don’t take into account any non-essential expenses, such as entertainment or luxury items.
The IVA terms
The terms of your IVA will also affect how much money you have left to live on.
For example, if your IVA is for a shorter period of time, you will have to make higher monthly payments.
This will mean you will have less money left to live on but will pay it off faster.
If you are struggling to make the monthly payments to your IVA, you may be able to get a hardship variation.
This is a change to the terms of your IVA that can reduce your monthly payments or extend the length of the agreement.
It is important to remember that an IVA is a serious financial commitment. You will have to make regular payments for a set period of time.
However, if you can stick to the terms of your IVA, you will be able to get a fresh start financially.
Here are some tips on how to make the most of your IVA:
- Create a budget. This will help you to track your income and expenses so that you can see how much money you have left to live on.
- Cut back on unnecessary expenses. This will free up more money to put towards your IVA payments.
- Get help from a debt adviser. They can help you to create a budget and negotiate with your creditors.
- Be patient. It takes time to get your finances back on track. Don’t get discouraged if you don’t see results immediately. Just keep working at it, and you’ll eventually reach your goals.
Is it right for you?
Whether an IVA is right for you depends on your individual circumstances.
It can be a good option if you are struggling to repay your debts and you are unable to get a debt relief order or bankruptcy.
An IVA can help you to:
- Lower stress and money worries
- Reduce the amount of debt you owe
- Freeze interest and charges on your debts
- Protect your assets
- Get a fresh start
There are also some downsides to an IVA, including:
- It will stay on your credit file for 6 years
- You have to make pay your IVA, even if you are struggling
- You may have to give up some of your assets
If you are considering an IVA, it is essential to get professional advice from a debt adviser.
They can help you to assess whether it’s right for you and they can help you to negotiate the terms of the agreement.
Here are some factors to consider when deciding whether an IVA is worth it for you:
- The amount of debt you owe
- Your income and expenses
- Your assets
- Your credit score
- Your willingness to make regular payments
If you think an IVA might be right for you, here are some steps you can take:
- Get professional advice from a debt adviser. They can help you to assess whether an IVA is right for you and they can help you to negotiate the terms of your IVA.
- Gather information about your debts. This will help you to understand how much debt you owe and who you owe it to.
- Calculate your income and expenses. This will help you to see how much money you have coming in and going out each month.
- Decide what you can afford to pay each month. This will help you to set a realistic budget for paying your IVA.
- Negotiate the terms with your creditors. This will involve working with an insolvency practitioner to agree on a payment plan that is affordable for you.
If you are successful in setting up an IVA, it can be a good way to get your finances back on track.
However, it’s important to remember that an IVA is not a magic solution.
You will still have to make regular payments and you will have to live within your means. If you are not willing to do this, it may not be the right option for you.
Here are some additional resources that you may find helpful:
There’s a lot to consider with an IVA and I would strongly urge you to see professional advice.
The IVA could be with you for years and on your credit file for up to 6 so it isn’t something to take lightly.
If it is the right solution for you, it can help reduce your debt, control your outgoings on debt, lower your stress levels and show you the light at the end of the tunnel.
For all those reasons, I think it’s a great idea if it’s the right option for your circumstances.
