IVA Calculator

An IVA calculator is a tool you’ll inevitably run into while researching on Individual Voluntary Arrangements. It is present on nearly every IVA company’s website and is a principal part of the IVA process.

What Is an IVA Calculator?

An IVA calculator is simply a tool that helps you approximate the amount of money you will pay to your creditors monthly given your earnings and expenses. This can help you decide whether an IVA is the right debt solution for you or not.

The calculator usually requires you to input your financial details. This will help it to formulate an appropriate estimate of how much you might be able to save if you opt to go for an IVA.

In addition to this, some calculators may present you with alternative debt solutions if they feel like this might not be the right option.

Our advice is to truthfully fill in as many details as possible so as to get the most accurate result from the calculator. Data protection is guaranteed and you need not worry about your information leaking to third parties.

How Is an IVA Calculated?

There are two major aspects that are considered when calculating individual voluntary arrangements. These are household income and expenditure.

Now it is important to know that household income incorporates the overall earnings of each member in the household. This will include all the major sources from where you derive money such as investments, business returns, salaries, and wages.

When it comes to expenditure, an IVA will focus on the vital housing costs that you normally incur. These could be rent, food, clothing, transport, water, electricity, gas, health care, and education. Our advice is to take your time while calculating such expenses.

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Your IVA budget should not include any unnecessary and exorbitant expenses like luxurious trips and tours. As a matter of fact, such spending will raise suspicion from your creditors and prompt an investigation.

As a debtor, you opt for an IVA to get an affordable debt payment scheme as you are honestly unable to pay the debt payments required. If you’re simply having money management problems, then our professionals can provide advice on how to set up a budget to quickly clear your loans.

Once both your income and expenditures have been determined, then what is left from their difference is the amount you will be required to pay. This is essentially what an IVA calculator does. From that amount, the calculator will then go on to allocate the debt payments you will pay to each creditor.

Since an IVA goes on for about 5 years, there is some amount of debt that will eventually be written off. Some calculators will show you the amount you will save with the help of an IVA.

How Much Is an IVA per Month?

There is no universal amount that everyone is supposed to pay to their IVA monthly.

The debt payments are normally calculated as your earnings fewer expenses.

However, most insolvency practitioners will ensure that you are able to pay at least £100 per month.

Is an IVA a Good Idea?

Now that you know exactly how an IVA is calculated, you’re probably wondering whether it’s a good or bad idea.

The answer to this is yes and no. You see, while it might seem like a beautiful rose, it does have a few thorns.

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We are going to look at the advantages and disadvantages of opting for an IVA debt solution.

Advantages of an IVA

The constant calls, emails, and threats from your creditors will be stopped. Since an individual voluntary arrangement is a contractual agreement, your creditors cannot continue to pursue you as long as you adhere to the requirements of the IVA. This remains the case even if you were not able to get a 100% IVA approval from the creditors. As long as you achieved the minimum percentage required (75%), then the remaining 25% of your creditors that rejected the IVA have no option but to respect it.

You are allowed to repay your debts as per your financial capability. Through an insolvency practitioner, you can set up an affordable IVA budget and that will relieve you a lot of stress. Moreover, as at the approval of an IVA, interests on your debt will be seized. This allows you to center your attention on the debt alone and not have to deal with another accumulating amount.

The creditor will not take your property. Unlike bankruptcy where a creditor can take your business assets or personal property as repayment for their loan, this option gives you an opportunity to redeem yourself without having to give away any of your assets.

You will be debt-free in 5 years. It does not matter whether the total debt is cleared or not, as long as you adhered to the contract, you will be free from your debt. This can give you an opportunity to improve your financial life. Our advice is to get a professional financial advisor on completion to ensure you do not get into a difficult debt situation again.

Disadvantages of an IVA

An IVA will negatively impact your credit score. Since an IVA suggests your inability to pay a loan in the required time, this will most certainly affect your score during the entire period.

If you happen to win a large sum of money or gain the same from any income source, then this might be put into consideration when calculating your IVA payments.

While the arrangement covers a number of debts, there are several types that are left out. They include court fines, student loans, child support arrears, mortgages, hire purchase agreements, TV license arrears, and social fund loans. If you are unable to repay these debts then you will need to seek other debt solutions.

You will be required to strictly follow the budget put in place by your insolvency practitioner. Insolvency practitioners play a huge role in organizing and administering an IVA. Therefore, you will need to inform them of any changes in your income and debt payments pattern. You also need to ensure that they are authorized by the Insolvency Practitioners Association and have a registered office in the UK.

How Much Money Does an IVA Leave You With?

The amount of money you remain with or save after the IVA period will hugely depend on the agreed-upon monthly debt payments. An IVA calculator can help you make an estimation.

You should also know that since insolvency practitioners are involved in such matters, a certain percentage of the money you pay will go to them as fees.

However, the fact of the matter is that an IVA allows you to pay a significantly lower percentage of your debt as compared to if you opted to do it alone.

Let’s say you had a debt of £15,000 and after an IVA approval you were allowed to pay £100 every month. Taking into consideration the common 5 year life period of an IVA then you will have paid a total of £6000 (£100×60 months) after 5 years. This means that will you have saved £9000 on completion. This amount will be written off and the creditors will have no legal right to pursue you to pay the amount.

Do I Qualify for an IVA?

The fate of your IVA request lies in the hands of your creditors. However, before going through with the application, there are certain things you need to consider as they may save you a lot of trouble.

For your Individual voluntary arrangement to stand a chance of being approved, you must prove that you lack the financial capability to repay the unsecured debts. This not only applies to within the set period by the creditor but also in the years that follow. We say this because creditors will most likely compare the returns they might get from your bankruptcy to that of an individual voluntary arrangement.

As most of these companies are registered in England, Wales, and Northern Ireland, being a resident is a huge consideration to creditors.

Your application is also likely to be approved if your unsecured debts are more than £10,000.

To increase your likelihood of getting your IVA approved, it is important to seek debt advice from an Insolvency practitioner licensed by the Insolvency Practitioners Association.

This is because they have vast experience in the subject. They can guide you through the process and even help you set up your application.

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Other Debt Solutions

An IVA is not the only debt solution you have and this is where speaking to a qualified debt advisor is very important.

After speaking to a debt consultant you might realise the best solutions are one of the following:

Make sure you take time to understand all the debt solutions available before making a decision because DMPs (aka debt management plans) are also a popular choice in the United Kingdom.

All UK Insolvency Practitioners

Here is a full list of Insolvency Practitioners in the UK:

The insolvency practitioner list above gives you plenty of options to choose the best IVA firm in April 2024.

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Speak to the debt advisor to check what debt solutions you have to help you consolidate debts into a single affordable monthly repayment.

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