Living with an IVA
Getting into debt is usually a very quick process and people do not even realize that they have debt issues only when they become serious. In the most cases debt is a result of reckless credit card usage and general overspending.
While in these situations an individual voluntary arrangement can be the best possible solution, living with an IVA requires some changes in the person’s lifestyle. There might be a few unhappy cases where debt is caused by unforeseen events like unemployment, illness and not by bad spending habits.
These people will not find it as hard to repay the IVA as people belonging to the first category. How will an IVA change your life? How much will you have to change your lifestyle?
We all know that an IVA changes a person’s life to the better: after a few years of payments, the person will become debt-free. Since it is designed to help people who have serious debt issues, the person will not have to pay too much monthly, but in every case even a smaller monthly payment requires a change in the lifestyle. You will have a discussion with your insolvency practitioner and he will ask you about your exact monthly income and the total amount of your debts.
He then will come up with a proposal which will be presented to your creditors, and if the necessary majority accepts the proposal, you have got yourself the IVA.
In order to go through all these steps, you will have to present several documents to your insolvency practitioner; they will help him calculate how much you can afford to pay each month. When he makes the calculations he will take into account your monthly income and the amount you need to survive from one month to the other. He will make the calculations in a way you will be able to lead a normal life, you will not have to give up on any of the really important things. However, most probably you will not be able to afford to dine out each night and you might choose to cut down on your cable too. Living with an IVA can be harder, but you should think about the final outcome: in five years you will become debt-free.
The insolvency practitioner will come up with a reasonable budget, but you have to prepare yourself that you will not be able to lead your previous lifestyle! In some cases it might happen that the difference between the monthly income and the expenses is too little, and you would need a bigger amount of money for the IVA’s monthly payments. When this is the case, the insolvency practitioner will go through all your expenses and he will give you a few ideas how can you cut back on your spending. You can do this yourself if you want to calculate how much you spend each month.
You can write a list with your expenses in a month, calculate the total amount then subtract it from the amount of your income. Another, somewhat easier way to calculate the amount you can afford to pay each month for your IVA is to search for a specialized homepage on the internet and find yourself a budget planner. Here you will have to introduce the numbers and the calculator will do the rest. It is good to try out things like this calculator, because you will see how much you spend each month and most probably you will find items on your list you never really needed.
By having a budget plan, it will be easier to follow your money and it is more likely that you will purchase only the things you really need, you will not let yourself fooled by several discounts on products you do not need at all.
Living with an IVA means that you will have to respect some ground rules. You will have to make your monthly payment on the agreed date, and you can use the money left to cover your expenses. Be prepared that the amount will not be big, but it is calculated in a way that it allows you to lead a decent life. You will have a decent life, but you will have to forget any luxuries you could afford (or at least you though you could afford) earlier, and which most probably led to the situation that now you need the IVA. You will have a strict budget; you will not be allowed to ask for a loan during the term of the IVA. After all, using your credit card is allowed, but only in certain limits, because you do not want to rebuild the debt you are trying to repay? Besides the fact that in five years you will become debt-free, IVAs have another positive part: they teach people how to handle money responsibly. You will have the chance to learn that you can lead a perfectly normal life even if you have a strict budget planned, that not everything is about the money.
There is only one more thing you should not forget: after you had repaid the IVA, you should not continue your previous lifestyle, because you might end up in debt again. Use your newly gained skills and make yourself a budget, of course, a somewhat less restrictive budget, because you will not have to calculate the amount of the monthly payments. After an IVA you will have the skills to lead a normal life and never ever accumulate debt again. Living with an IVA is a little harder, but you can get through it, and besides repaying your debts within a reasonably short period of time, you will learn to life after a budget and you will never overspend again.