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What is an IVA?
An IVA is usually a 5 to 6-year debt solution designed to help you write off the majority of your unsecured debts through regular monthly repayments.
You will work with a debt advice provider (such as PayPlan) to go over your finances and they will talk to your creditors to try and arrange an affordable payment plan. If your creditors approve the IVA proposal, the creditors included will not be able to chase you for the money owed or charge you interest and fees during your IVA term.
How are IVA payments worked out?
You and your debt advice provider will work out what is affordable to you by assessing your finances through an income and expenditure form. Once you find out what your surplus is each month, this will help to work out what you can afford to pay back to your creditors in your IVA.
You will need to be very honest when discussing your income and expenditure, as this will help form an IVA plan that is manageable and affordable for you. Your IVA term may be increased by a year if you have equity in your home.
How much could I save in an IVA?
To get an idea of how much you could save, try an IVA calculator. Please be warned that you will not be able to find out if you are eligible for an IVA just by filling out the calculator. You will need to speak to an adviser who will be able to get a better overview of your situation and advise appropriately.
Once you enter an IVA, you will need to be strict and stick to the budget you have been allowed. If you need advice on budgeting, you can find it here. It will be a commitment to keep to your budget but doing so successfully will allow you to complete your IVA and potentially write off a considerable amount of debt at the end of your IVA.
What happens if I cannot keep up with my payments?
If you cannot keep up with your repayments, you should get in touch with your IVA company straight away. They will be able to offer you advice and may be able to work with your creditors to make your plan more affordable.
If you do not keep up with your repayments and do not get in touch with your debt management company, your IVA will be at risk of failing, and your creditors will be able to chase you for money and impose charges and interest onto your debts.
What happens if I come into money during my IVA?
If you receive a financial windfall or inherit some money during your plan, you may be expected to contribute this into your IVA. You may have an initial reluctance to do this, but as you are entering a plan where the majority of your debts could be written off, this is a compromise you will have to make.
If you come into a considerable amount of money, you may be able make an offer to your creditors to end your IVA early, allowing you to become debt free sooner.
Will I pay the same amount into my IVA every year?
After each year of your IVA passes, you will have to do an Annual Review with your debt management company. This shouldn’t take too long to complete, and it’s a chance for you and your adviser to review how you are doing and to see if your circumstances have changed.
If your financial situation doesn’t change, it’s likely your monthly IVA payments will be similar for the following year. If there has been a change, your monthly payment may be amended.
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