Working at StepChange debt Charity, we often see clients going through a...
5 IVA survival tips
This page contains information about debt solutions available in England, Wales and Northern Ireland. Debt advice in Scotland involves similar but different solutions. Before considering an IVA as a debt solution, please make sure you fully understand the risks involved when entering an IVA.
If you’re with StepChange Voluntary Arrangements an Individual Voluntary Arrangement (IVA) is the best solution to your financial difficulties.
Having your IVA approved is a massive achievement. Provided that you stick to the terms of the IVA proposal there is a set time frame for you to be debt-free.
Once you’ve paid as much as you can during this time your creditors will write off some of your debt.
In this article we’re giving our top tips on how to cope once your IVA is approved and up and running. If you follow these five tip top tips your IVA will be a much smoother ride.
1. Learn to live on a budget
The last page of your IVA proposal is your budget; it lists every item of your income and expenditure.
For some people this could be the first time they’ve actively put together a household budget. For a few more it may be the first time they’ve tried to live on a budget without using credit. Your spending will be restricted while the IVA is active than what you’re used to, so it’s important to stick to your means as much as possible.
Budgeting is an art, and it’s also essential to the success of your IVA. And one of the secrets of good budgeting is to make sure you save your monthly allowances for annual expenses.
For example, if you have a car and MOT costs are listed in each month’s budget, you must make sure you put this money aside towards your MOT. That means when the annual MOT comes around, you’ve already got the money for it put aside.
There are other annual costs that are assigned a monthly amount, it’s best to stick this budget and put those funds aside. This always helps to cut down on nasty financial surprises.
2. Keep on top of overtime and bonuses
We’ve spoken before about overtime and bonuses and how these work in your IVA. The most important thing to take from this article is that you need to contact us if you’re not sure how a wage rise, extra money, overtime payments or bonuses will affect your IVA.
It only takes our team a few seconds to work out how much extra you need to pay into your IVA when it comes to bonuses or overtime, and remember – we won’t take all of it!
It’s always best to keep on top as not doing so could mean you breach the terms of your IVA.
3. Don’t be tempted by extra credit
Taking out extra credit can really be an IVA killer, so if you’re tempted to take an extra loan then please contact us first.
Taking out more credit is in most cases a breach of the terms of your IVA. If you do have a situation where you need emergency funds please speak to us and we’ll see how we can help.
Needing extra money on a monthly basis means that your budget isn’t working, again the answer to this is to speak to us, especially if some of your monthly outgoings have changed. You don’t need to wait for your annual review to tell us about any changes.
4. Develop a support network
Apart from the help we give, there are other places to look for support. The MoneySavingExpert website has a brilliant forum and one section in particular is dedicated to those on the road to being debt free.
Some people might be on a debt management plan (DMP) or other solutions some will be on IVAs or just simply scrimping and saving to pay off debt. You can find some great support and good advice on this forum.
There’s also our own MoneyAware blog, with handy hints, tips and other advice to help keep control of your finances. You can also leave comments and ask questions on MoneyAware that we’ll be happy to answer.
5. Keep in touch – we can help!
While it might seem like much of the hard work was done when we helped you set up the IVA it’s really only the beginning of our commitment to you.
Once you’re on an IVA we’re here to make sure you see it to the end. All sorts of things can happen in life, and your situation can change without warning, but we’ll always try our best to make sure that your IVA stays in place and remains the best solution for you.
If you’re unsure of anything, don’t be scared to get in touch…