How Much Does an IVA Leave You to Live On?
When considering an Individual Voluntary Arrangement (IVA) as a solution for managing your debts, one of the most common questions people ask is, "How much will I have left to live on after my IVA payments?" It’s an important question, and it’s understandable to want clarity before making a decision.
The good news is that the process of setting up an IVA is designed to ensure that you can still manage your everyday living expenses while making regular contributions toward your debt repayment. Before any IVA payments are agreed upon, a full income and expenditure assessment is carried out by your IVA advisor. This ensures that the amount you are asked to pay is based on what you can actually afford.
Step 1: Assessing Your Income
The first step in determining your IVA payment is understanding your total monthly income. This includes not just your salary but also any other sources of income, such as benefits, bonuses, or any additional financial support. This figure helps to establish the budget you have available for both your living expenses and debt repayments.
Step 2: Calculating Your Expenditure
Once your income is clear, your IVA advisor will work with you to list all of your monthly expenditures. This includes essential costs such as:
- Rent/Mortgage
- Council Tax
- Utilities (Gas, Electric, Water)
- TV License
- TV/Broadband
- Mobile Phones
- Travel Costs (Fuel, Public Transport)
- Food Shopping
- Pets (Food, Healthcare, etc.)
- Smoking and Alcohol (If applicable)
- Clothing/Footwear
- Hairdressing
- Cleaning and Toiletries
- Health Costs
- Memberships/Subscriptions (Gym, Streaming Services, etc.)
- Hobbies/Sports/Entertainment
Step 3: Taking into Account Personal Circumstances
Every person’s financial situation is different, so your IVA advisor will also consider your circumstances. Factors like how many dependents you have, whether you live alone, or whether you're paying child maintenance or have childcare costs will all be considered in the calculation. These factors can influence the amount of disposable income you have and help ensure that your monthly expenses are reasonable and realistic.
Step 4: IVA Proposal and Payment Calculation
Once your income and expenditure have been fully assessed, the advisor will calculate the amount you can afford to pay toward your debts each month. This figure will be included in the IVA proposal, which is then presented to your creditors for approval.
Your IVA payment will be the amount left after covering all of your living expenses. This means that, even though you are paying towards your debts, the IVA is structured in such a way that you still have enough left to live comfortably within reason. It’s about striking the right balance, allowing you to meet your debt obligations without leaving you financially stretched.
The Benefits of an IVA
One of the key advantages of an IVA is that it provides legal protection against creditor actions, such as phone calls, letters, and even potential legal action. Your IVA payment is fixed and agreed upon at the outset, meaning that it can help you regain control over your finances and work towards becoming debt-free in a manageable and structured way.
Importantly, an IVA isn’t about taking all your disposable income and leaving you with nothing to live on. It's designed to be a fair solution for both you and your creditors, ensuring that you have enough money to cover your daily needs while also contributing towards clearing your debts.
What Happens After the IVA is Set Up?
Once your IVA is approved, you’ll make regular monthly payments based on the agreed-upon amount. These payments will continue for a set period (usually 5 years), after which any remaining debt will be written off, providing you with a clear path towards becoming debt-free. Throughout this time, your advisor will be there to support you, ensuring that your IVA is manageable and that you don’t feel overwhelmed.
Take the First Step Towards Debt Relief
At Stop My Debts, we understand how overwhelming dealing with debt can be, which is why we are here to help. If you’re wondering how much an IVA would leave you to live on, or if you have any other questions about the IVA process, don’t hesitate to get in touch. One of our experienced advisors can guide you through the entire process, answer any questions you may have, and help you decide if an IVA is the right solution for you.
Contact us today for a free consultation, and take the first step towards a debt-free future with confidence.