How much does an IVA leave you to live on?

An IVA is specifically designed to leave you with enough money to enjoy an acceptable standard of living.

You won’t be in a position to live an extravagant lifestyle while you’re on an IVA. But you won’t be expected to live like a monk either.

Budgeting for an IVA

As well as leaving you money for basics like food, rent and clothing, an IVA budget also lets you set aside a modest amount of money for things like socialising. These are all treated as essential household costs.

To make sure you’re left with enough money to live on, the company setting up your IVA will go through all the money you have coming in and look at how you’re spending it. This will cover every area of household spending, including:

food
rent/mortgage payments
clothing
travel
socialising
mobile phones
broadband
gas, electricity and water bills
council tax

There are IVA guidelines that set out acceptable limits for each area. These limits are ones that creditors are generally happy with. The IVA expert who goes through your budget with you will make sure you’re not going above these limits without good reason. This means, as well as making sure you’re left with enough money to live on, there’s a high chance the monthly payments being offered to creditors will be accepted.

If you’re spending more than expected in a particular area, your IVA expert will check why. If there are no exceptional circumstances to explain the high level of spending, you may have to cut back. If you don’t cut back, creditors may reject your IVA proposal.

How much will my monthly IVA payments be?

Your monthly IVA payment will be the amount left over after your essential costs have been covered. So if your monthly income is £1,200 and your essential costs are £1,000, your monthly IVA payment will be £200.

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What is the minimum monthly payment for an IVA?

There is no official minimum monthly IVA payment. But if you can’t afford a reasonable amount each month, your creditors are likely to reject your IVA proposal.

In these circumstances, an alternative debt solution may be better for you.

How much can you save on an IVA?

When you’re on an IVA, any spare money you have after covering your essential household costs will generally be paid into your IVA. This doesn’t mean it’s impossible to save. But any money you put aside will need to come from savings you’ve managed to make within your household budget or from extra earnings you’ve been allowed to keep.

What fees will I need to pay on an IVA?

There are always fees for an individual voluntary arrangement. How much they are and when you pay them will depend on the provider you choose.

If after listening to our advice you choose to go ahead with an IVA, you’ll need a qualified insolvency expert to set it up. With your agreement, we can pass you over to our sister company Freeman Jones to help with this.

Freeman Jones will only start charging fees once your IVA has been agreed. Those fees are taken from – not on top of – your regular IVA payments. They usually charge a fixed fee of £3,650 – this is standard across the industry.

All fees need to be agreed by you and your creditors before your IVA is approved.

IVA fees cover:

the cost of putting your proposal to creditors
the ongoing cost of running your IVA
extra expenses directly related to running your IVA (such as insurance and postage)

Other companies may charge different fees.