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How Much Does an IVA Leave You to Live on?

An Individual Voluntary Arrangement is one of the best ways to relieve yourself of debt, but as with most legally binding agreements – it’s something you shouldn’t go into lightly. While IVA’s can be a helpful solution if your debts are mounting up, there are some vital things to consider.

So, if you’re wondering how an individual voluntary arrangement will impact your finances, we have everything you need to know.

How Does an Individual Voluntary Arrangement (IVA) Work?

When you take out at IVA, you’re forming a binding relationship with your creditors, where you promise to repay your debts over a lengthy period. Instead of making large payments, which incur interest, your monthly agreement will be based on your financial circumstances and how much you can afford. Only registered insolvency practitioners can help someone secure an IVA, and it’s seen as a solution when other forms of debt help and relief haven’t worked for your needs. Your licensed insolvency practitioner will look at your circumstances and decide whether you’re a suitable candidate.

How Will An IVA Impact My Life?

As with most debt solutions, an IVA will impact your life in many ways – but most of them are positive. However, your income influences how much you’ll pay into the account, which could change over time.

So, here are some ways an IVA might affect your finances, job and credibility.

Am I Going to Lose My Job?

In most cases, an IVA won’t impact your employment, but there are a couple of exceptions. Both accountants and solicitors might have to stop practising or will be unable to work in some instances.

If you’re wondering whether your IVA may restrict your employment options, please get in touch with us for help and advice.

Will I Have to Sell My Personal Belongings?

In general, items in your home won’t impact your IVA, and most creditors understand when it comes to household goods and your car. However, if you own expensive paintings, jewellery, antiques and other valuable items, it’s a good idea to sell them to raise some extra cash.

If you can pay off a larger initial amount, your monthly IVA payment will be lower, and you’ll free yourself of debt.

What If I Receive a Lump Sum?

If you receive an inheritance payment or win the lottery, you might be required to pay off the remaining balance of your debts. Some IVA’s have a windfall clause, which states that anyone receiving a lump sum has to pay the money into their IVA account.

Can I Rent With an IVA?

Renting a house when you have outstanding loan payments can be difficult. Still, an Individual voluntary arrangement could help you secure a property because of how the agreement works.

Your monthly payments are calculated to enable you to afford rent, so in most cases, you don’t need to worry about your living costs.

However, landlords and property letting agencies can access your credit file, so some might be unwilling to rent if you have an IVA.

Both mortgage providers and letting agencies might trust you more if you can provide a detailed breakdown of your monthly budget to prove you can afford your monthly payments.

Alternatively, you can ask someone to act as a guarantor, which means they take on your debt if you file for bankruptcy or can’t stick to your tenancy agreement.

What Happens When I Die?

Nobody wants to think about death, but it’s a natural part of life, and many people aren’t sure how an IVA will impact their family after they pass on. After you pass away, your IVA won’t automatically be cancelled, so your family will need to ask the creditors to finalise the account and sign it off.

If your IVA isn’t completed and the creditors don’t accept a request to close it off, we may be able to help you and your family avoid extra payments. In some cases, the debts might fall upon your assets. So if you leave your home to a family member, they might find they have to settle the account using money from your estate.

Contact Us Today For IVA Advice

While there are many considerations to consider before you take out an IVA, there’s no getting away from the fact that these agreements are designed to relieve you of debt and can be helpful if you can’t make payments.

Whether you repay the money over 5 years or 6 years, consolidating your fees has a number of benefits. If you’d like some advice, please feel free to contact us to discuss your circumstances.

Our company is authorised and regulated by the Financial Conduct Authority, and our team can discuss how IVA’s might impact any additional income you receive.

Please use your helpful contact form, or get in touch using our phone number or email address. We look forward to helping you.