How much will I have to pay towards an IVA in Northern Ireland?

Individual Voluntary Arrangements (IVAs) can be a great option for individuals in Northern Ireland who are struggling to keep up with the monthly repayments on their debts. You will still need to make payments towards your debts while in an IVA, however, this monthly repayment is often considerably less than you will be paying prior to entering into this type of arrangement.

Let’s understand the cost of an IVA and how much you may be expected to pay.

There is no set monthly cost of an IVA, instead, the amount you will be asked to pay will be calculated based on your earnings and how much disposable income you have after paying all of your necessary bills and essential living costs. As a general rule, you will typically need at least £100 of disposable income in order to be considered for an IVA.

The exact amount of your monthly IVA payment will need to be agreed to by your creditors, however, you appointed insolvency practitioner can take care of these negotiations on your behalf.

It should be remembered that an IVA is designed to be affordable, meaning you will not be expected to pay more than you can comfortably afford based on your income and outgoings.

IVAs typically last for five years, meaning you will need to make 60 monthly payments towards your debts.

In certain circumstances, an IVA can be extended for an additional year. This may be done if you have failed to fully pay what you agreed to over the previous five years, or if you have significant equity in your property which cannot be released.

You may be able to end an IVA early if you come into a windfall – such as an inheritance, lottery win, or bonus – which allows you to offer creditors a lump-sum as repayment of the amount still owed.

IVAs are designed as an affordable way for an individual to pay their debts, not as a form of punishment. This means that your monthly IVA payment will be calculated to take into account reasonable daily living costs and allowable expenses. These include items such as:

• Mortgage/rent payments
• Utility bills including water
• Childcare bills
• Healthcare costs including prescriptions
• Travel and transport costs including public transport and car ownership
• Schooling costs including uniforms and afterschool clubs
• Food and housekeeping
• Personal costs including hairdressing, toiletries, and clothing

You will also be given an allowance for things such as hobbies, pocket money, and gifts in order to ensure you have a reasonable standard of living while in an IVA.

As an IVA requires the input of a licensed insolvency practitioner, there are some costs involved in the setting up and running of the IVA.

However, these costs will already be built-in to your monthly repayment meaning there will be nothing additional to pay outside of this. Your insolvency practitioner will simply deduct their fees from the amount received by you before dividing the rest amongst your creditors.

If you are a resident of Northern Ireland and are considering entering into an IVA in order to better manage your outstanding debts, the experts at Northern Ireland Debt Solutions are here to help.

As a team of licensed insolvency practitioners, we can talk you through your debt help options – which may include an IVA – and help you understand exactly what this would mean for you and how much it will cost you. We will be with you every step of the way from your first call to us through to your final IVA payment.

Contact the team today to take the first step.