How much does an IVA leave you to live on?
Nov 21, 2022 ● 5 min
One of the most common questions about IVAs is, ‘how much will an IVA leave me to live on?’
Well, there’s no ‘one size fits all’ approach to this question when it comes to IVAs, and the answer to this varies from person to person. What you pay may be different from what somebody else pays. This is because an IVA is based on your own financial circumstances, such as:
- Your debt level – how much is owed to creditors
- Your income – how much you have coming in from work, benefits or pension
- Your affordability – how much you have left after essential costs each month
That said, we’d like to help you understand what an IVA may mean for you, and what steps can be taken to help paint a picture of how much an IVA may leave you to live on.
IVAs are Affordable
IVAs were first introduced in the 80s, and their main purpose was to help reduce the number of people in debt in the UK. They are designed in a way that helps protect the consumer, as they are a legal contract between you and your creditors and this contract is overseen by a licensed Insolvency Practitioner.
When we refer to ‘affordability,’ this means what’s left after your usual monthly outgoings, including things like rent / mortgage payments, utility bills, clothing, subscriptions, travel, food / drinks, social occasions. IVAs are designed to help you, not catch you out. If you’re a homeowner, then your home is safe – an IVA doesn’t involve your assets being sold off, such as with Bankruptcy.
If you’re researching IVAs as a possible debt solution, you’ll likely have come across online IVA calculators, such as ours.
This tool can help give you a rough idea of what you might expect to pay for an IVA, based on your financial situation. Whilst these are not final figures, this can hopefully help you visualise what realistic IVA payments can look like, regardless of your debt level.
As part of our IVA consultation process, our agents will work with you to help make realistic calculations based on your own situation. There are many nuances between all clients that we listen to, and so we know how to tailor our support to give you as accurate-as-possible figures so that you can make the right decision regarding an IVA, or any other debt solution.
One of the big reliefs that are mentioned by clients entering into IVAs, is how manageable debts become. Without an IVA, your creditors can demand money from you, send bailiffs and charge interest. If you have more than one creditor, this can rapidly become overwhelming, and you can be left with high bills and multiple payment dates due each month.
Through entering an IVA, you can freeze all interest and charges, and your payments can be reduced, leaving you with just one monthly payment to deal with. What’s more, is that after 5 years, any remaining debt is written off.
Making a Decision
It’s important to know that any debt company offering IVAs must complete an affordability assessment with you first before you sign anything. Some essential points to remember are:
- You should only be offered free and impartial guidance around IVAs and other debt solutions, and you should never pay a penny until you have agreed and signed a contract.
- No company can guarantee your monthly payment without completing a financial assessment with you first.
- You would not be bound by any agreement until you have signed one, along with your creditors.
We offer further advice about the decision process and IVA companies to avoid.
IVAs and Money Advice
At Money Advice, we can offer help with any debt you may be struggling with, whether that’s signposting to the relevant support, or helping put together an application for a solution such as an IVA.
We know debt, and we answer questions from people in a similar position every day. If you’d like to know more, we’ve compiled some of the other most common questions on our IVA FAQs page, or alternatively, our experienced team are on hand to answer anything else you might like to ask.