How much will the IVA payments be?
Fundamentally, IVA payments are based on affordability, which means that you should not be expected to repay more than you can actually afford.
But, on a second level, there is also a relationship between the size of the debt you owe and the amount creditors will expect you to repay.
IVAs are based on affordability Only Pay What You Can Comfortably Afford
How Is My IVA Payment Calculated?
Your IVA payment will be calculated in such a way as to ensure it remain affordable throughout your IVA.
This is done via an analysis of your household income and expenditure.
Your IVA payment will be equal to the amount of money left over, once all of your essential living costs have been deducted from your income.
Put simply, if you earn £2,000 and your total living costs are £1,850 then your IVA payment should be £150.
Experience tells us that IVAs built on the solid foundation of a realistic and manageable IVA budget stand the very highest chance of success.
With this in mind, IVAorg will only propose an IVA with payments you are confident you will be able to afford.
What is an IVA budget?
Your creditors will be keen to ensure your expenditure represents a realistic reflection of the everyday costs you encounter, either as an individual or as a household.
Creditors will be keen to ensure there are no unnecessary or excessive expenses being incurred, too.
To ensure this is the case, all reputable debt advisory firms use a range of 'industry recognised' allowances for each area of a typical household budget and these allowances are known to be agreeable to creditors.
The allowances cover all aspects of household expenditure, including food, clothing, travel, utility bills, communication costs and costs associated with well-being.
When applied correctly, the allowances ensure that the IVA payments being proposed are affordable to the applicant whilst making sure the allowance levels are agreeable to creditors.
What if I have unusually high costs?
As said earlier, IVA payments are based on affordability.
If your IVA budget has an unusually high expense contained within it, such as unusually high petrol costs, your Insolvency Practitioner will seek validation to support that particular expense.
If the expense can be proven to be unavoidable and essential, then it will be allowed to stand.
But creditors get the final say on unusually high allowance levels during the creditors meeting. If they don't agree with an expense they can put forward a modification to have that allowance reduced.
What is the minimum IVA payment?
The minimum IVA payment represents the figure creditors would expect you to pay in to your IVA in order to repay their minimum expectation of 25% of your original debt, once the IVA costs have been deducted from your payments.
The slider tool at the side of this page demonstrates the relationship between an outstanding debt level and the minimum IVA payment for that level debt.
It shows quite simply, the more you owe, the larger your IVA payment will need to be.