subject: How Much Will I Have To Pay Each Month On An Iva? [print this page] People struggling with unmanageable debts often have a number of options available to them. One common option with more serious levels of debt is an IVA, or Individual Voluntary Arrangement: a formal agreement with your lenders in which you'll repay as much of your debts as you can afford over a set period of time, after which any remaining debt will be written off.
How much will I pay?
Although your debt repayments are reduced on an IVA, you'll still be expected to pay as much as you can afford.
Your IVA payments will be calculated by looking at your take-home pay minus essential costs not covered by the IVA (such as bills, mortgage/rent and food). What's left will be the amount you can afford to put towards your debts each month.
So, for example, if you take home 1,375 a month and your total essential outgoings (not including unsecured credit commitments) come to 1,025, you'll have 350 left - and you'll be expected to put most of this towards your IVA each month.
If your circumstances change, it may be possible to change the amount you pay. Most IVAs will have terms written into them to account for slight changes in your circumstances - so a small rise or fall in your income shouldn't impact too much.
If there's a significant change in your circumstances, though, your terms may have to be re-negotiated in the same way as your original IVA, with sufficient approval from your creditors.
In some cases, if your income falls significantly, it may well be that your IVA is no longer viable, in which case you may have to consider alternative debt solutions (such as bankruptcy or a debt management plan).
What else should I consider with an IVA?
Above all, you'll need to understand the impact an IVA will have on you and ensure it is the most appropriate solution. IVAs are designed for people who can't afford to repay their debts in full within a reasonable timeframe, but can (usually) still commit to reasonable and consistent monthly payments.
Even if you do qualify for an IVA, it might not be your best option, however. In some cases, another debt solution such as bankruptcy could be more appropriate. You should always discuss all your options with an independent debt adviser before making a decision.
by: Melanie Taylor
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