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IVA : What Can I Do To Help Myself Afford An IVA?
The affordability of an Individual Voluntary Arrangement (IVA) is crucial to the long term success of the Individual Voluntary Arrangement (IVA).
If payments into the Individual Voluntary Arrangement (IVA) are not assured there is a possibility of the Individual Voluntary Arrangement (IVA) failing.
Here are some things you may wish to consider to help you afford an Individual Voluntary Arrangement (IVA).
The starting point for payments into an Individual Voluntary Arrangement (IVA) are based on what creditors will accept as a minimumpayment. This minimum is not a fixed figure and can be whatever the creditors agree to collectively. Having said that, there is a benchmark figure of 25 pence in the pound that is generally accepted as the standard minimum for entry into an Individual Voluntary Arrangement (IVA). It should also be said that if you can afford more than the minimum 25p in the pound you will be expected to pay more.
With this information it is possible to work out a minimum monthly payment that ought to be acceptable to creditors in an Individual Voluntary Arrangement (IVA). This is based on a percentage of the level of your debt plus the costs of your Insolvency Practitioner who supervises your Individual Voluntary Arrangement (IVA).
So if you can't afford the minimum monthly payment needed for your Individual Voluntary Arrangement (IVA) what can you do?
The first thing you should consider is whether you are able to earn any extra money. This may seem obvious, but it is surprising how many people fail to consider it as an option to help them secure an Individual Voluntary Arrangement (IVA). The shortfall between what you can afford now and what is needed to get an Individual Voluntary Arrangement (IVA) may be bridgeable if you can work overtime, or get a part time job after hours.
If working for extra money is not an option, it may be possible to save money by making some lifestyle changes. For example, if you smoke, quitting would have health benefits as well as financial ones. It may be that your car is big and expensive allowing you to downsize, therefore making savings on transport costs. Savings like these may just be enough to allow you to make payments into an Individual Voluntary Arrangement (IVA).
If you own your own house and there is no releasable equity to allow you to pay off your debt, which then makes an Individual Voluntary Arrangement (IVA) possible, you could consider changing your mortgage type from a "Capital and Repayment" mortgage to an "Interest Only" mortgage. This has the effect of reducing how much you pay each month on your mortgage. By reducing this amount you free up extra money which you could then offer to creditors in an Individual Voluntary Arrangement (IVA).
If you don't own your own house but rent one, and if you have enough space, you could consider taking a lodger. This is an excellent way of generating extra funds and, upto certain amounts, is exempt from tax. Similarly if you have offspring who work but still live at home, asking for a realistic figure for board and lodgings may increase what you can offer creditors in an Individual Voluntary Arrangement (IVA) therefore making it viable.
If your ability to afford an Individual Voluntary Arrangement (IVA) is reduced because you are buying a car with a Hire Purchase Agreement, then an Individual Voluntary Arrangement (IVA) may still be possible. Faced with this scenario it is sometimes possible to enter into an Individual Voluntary Arrangement (IVA) by paying a lesser monthly contribution until the hire purchase agreement is finished. At that point if the vehicle is still serviceable and there is enough time in the Individual Voluntary Arrangement (IVA) for the payments that were being used to pay for the loan to be switched to the Individual Voluntary Arrangement (IVA), as long as the combined average payment over the 60 months of an Individual Voluntary Arrangement (IVA) are equal to the minimum payments acceptable to creditors, an Individual Voluntary Arrangement (IVA) may still be possible.
Finally, it is acceptable for a third party to assist you in your Individual Voluntary Arrangement (IVA). If you are unable to pay the required minimum, but have access to third party funds, creditors will approve Individual Voluntary Arrangements (IVAs) if that third party will guarantee the shortfall.
If you are in serious debt and need to talk to one of our specialist advisers call 0800 088 7503 or visit myIVA-Adviser.com to download one of our free guides designed to help you find answers to your debt problem.
