Learning to live without credit

Some people entering into an Individual Voluntary Arrangement (IVA) will find it difficult to adjust to the concept of living without credit.

Which is hardly surprising when you consider how much we've all become accustomed to living in a society where the use of credit is positively encouraged.

But, in reality, for the majority of IVA applicants, learning to live without credit, within an IVA budget, will be pretty straightforward.

Different Uses Of Credit

Having access to credit gives a sense of security that, should the unexpected happen, everything will be fine because the credit will cover it. When used like this, credit acts like a financial shock absorber on the road of life, protecting you from the inevitable pothole or two.

But, in truth, most people with financial problems don't use credit in this way - quite simply they can't afford to.
For the majority of people with a debt problem, credit is simply there to help them make ends meet each month.

And when credit is used in this way it's a very different prospect.

Credit's no longer an optional extra, it's become a necessity. Its ability to act as a shock absorber has gone and, instead, it's become a liability, providing nothing more than a false sense of security.

No debt - no need for credit

Entering an IVA removes your liability to your unsecured debts and your IVA budget breaks the monthly cycle of robbing Peter to pay Paul.

Once the IVA begins, all your personal expenses are accounted for and prioritised ahead of your IVA payments. You retain as much money from your income as you need to make ends meet each month.

This ensures that you're no longer worrying about trying to make ends meet and, should, remove the need for credit.

Setting a realistic budget

An IVA is designed to allow you to make payments based on affordability each month.

Affordability is calculated by deducting your modest personal living costs from your income, with the remainder being offered to creditors.

It's crucial, therefore, to make sure you've set yourself a realistic budget, otherwise your monthly budget could end up being unrealistic and unaffordable.

My IVA Adviser specialise in helping people establish their IVA budget. For professional help with your IVA application call 0800 088 7503.

Hidden benefit

At the successful completion of your IVA, you'll be completely debt free.

You'll have repaid all you could afford and whatever debt didn't get repaid through the IVA will have been written-off by your creditors.

Your IVA payments will stop and, from now on, the money you were paying into the IVA will be surplus to your monthly budget, offering you an opportunity to save for a rainy day.

If you've got some savings put aside, your need for a financial shock absorber would be removed and, along with it, your need for further credit.

Professional IVA Budget Advice

The team at My IVA Adviser are IVA budget specialists.

If you would like to have a chat with an IVA adviser about your personal circumstances, please call 0800 088 7503.
During your consultation we'll make sure your interests and personal needs are protected from your creditors.

There's no charge for a professional consultation, there's no obligation to act on the advice you receive and your enquiry will be held in the strictest confidence.

If you'd rather not call us, simply complete this form and one of our advisers will contact you at your preferred time.

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In accordance with the Financial Conduct Authority's guidance, please follow this link if you would like to read a free guide about In Debt - Dealing with your creditors
To find out more about managing your money and getting free debt advice, visit Money Advice Service , an independent service set up to help people manage their money.

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