How much do you pay with IVA?
So, how much do you pay with an IVA?
The truth of the matter is the payment into each IVA will be different, because the IVA payment is based on affordability.
Two people with the same debt level might have very different personal circumstances, and what might be affordable to one might not be affordable to the other.
So it's the applicant's personal circumstances that determine what they can afford.
Minimum Payment Level
There also exists a minimum payment level for each IVA, below which the viability of the IVA will be called into question. This minimum payment level is related to the size of the debt owed.
The higher the level of debt owed, the higher the minimum debt level will be for an IVA.
The debt slider
In the righthand margin of every page on this site you'll see our debt slider tool.
This simple to use tool uses an extremely complex algorithm to calculate the minimum payment level for all debt levels up to £100,000.
If you move the slide to reveal your personal debt level, you'll see how much your creditors would expected you to pay into an IVA each month, as an absolute minimum.
But, in truth, your creditors will expect you to pay into your IVA whatever you can actually afford and so, if you can afford to repay more than the absolute minimum you'll be expected to do so.
Striking A Balance
Setting the right financial balance is at the heart of all IVA budgets and striking the right balance between the needs of the applicant and the demands of the creditors is crucial.
Give the creditors too much and the IVA will be unsustainable for the applicant, yet offer below the minimum payment level to the creditors and they could reject the proposal out of hand.
It's down to the skill of your adviser to get this balance right.
That's why it's so important to use My IVA Adviser for your IVA application. Without doubt we completely understand your needs and those of your creditors which ensures we get that balance right every time.
Calculating the IVA payment
So, how do we calculate how much you pay into an IVA?
Well firstly, we take a detailed list of your complete household income.
This will consist of your wages, and may reflect overtime, bonuses or commissions. We add to that any other income that the household is receiving, such as Child Tax Credits, other benefits, allowances, bursaries and possibly even lodgers contributions or board from a family member where appropriate.
Once we are satisfied we've accounted for the complete household income, we then list out all the family's expenditure.
An allowance for every single expense is added to the list, starting with the big expenses such as mortgage payments, rent, council tax and utility bills. Travel expenditure is next on the list and, when relevant, the costs involved with running a vehicle.
We then add allowances for the household food and clothing and other allowances for haircuts and any personal health requirements. Then, finally, modest allowances for entertainment and hobbies.
Once we have taken account of everything, we are able to see the difference between the two numbers and this difference is called your disposable income.
Your disposable income is the amount that you should be able to offer to your creditors in the IVA.
Because an IVA's contributions are supposed to be set at what is deemed affordable to you, you should never be required to offer more than your disposable income into an IVA.
Professional IVA Help
If you're struggling to establish how much you'd be expected to pay into an IVA, why not give us a call.
Often, having a chat with an adviser will help you to fully appreciate how an IVA may help you, whilst giving you the perfect opportunity to ask any IVA related questions you may have.
The team are waiting to help you, so call 0800 088 7503, or alternatively, complete this form and one of pur advisers will call you at your preferred time.