IVA Examples | Individual Voluntary Arrangement Case Studies

An Individual Voluntary Arrangement (IVA) is one of the most popular debt repayment plans today. An IVA helps you by reducing the monthly payment you have to make and spreading the payment over a five-year period.

You can pay your IVA early if you want to, but there are factors you have to take into consideration before going in for the full and final settlement.

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In this article, we will be discussing how you can settle your IVA debt repayment plan early and the reasons why paying early would be beneficial for you.

We will also take a look into the various financial situations and case samples to see how Individual Voluntary Arrangements can adjust to your current financial situation.

Table of Content

1 IVA Case Examples
2 Payment Break
- 2.1 Payment Break Case Example
3 6-year Payment Period
- 3.1 6-year Payment Period Case Example
4 Making a Full Repayment
- 4.1 Making a Full Repayment Case Example
5 Third-party Contributes to Monthly Payments
- 5.1 Third-party Contributes to Monthly Payments Case Example
6 A Shorter Term Arrangement
- 6.1 A Shorter Term Arrangement Case Example
7 A Shorter Term Arrangement with Lump Sum
- 7.1 A Shorter Term Arrangement with Lump Sum Case Example
8 FAQ
9 Contacting Debt Charities
10 Summary
11 IVA Debt Help Information
12 Other Debt Solutions

IVA Case Examples

Here are many examples of IVAs being helped with debt repayment plans.

£8,214 Debt Level IVA Case Example

This first IVA case sample showed a debtor who may not have had access to debt advice. After finding themselves with challenging financial circumstances, they opted to take out another loan to settle other debt repayments. However, they still had other debts that were still unpaid, and after the loan repayments were added to the existing unpaid debt, they found themselves with even more debt than before.

After seeking better debt advice and after being encouraged by their growing family, the debtor opted for an IVA as their debt solution. His IVA proposal put £77 as the new amount for his monthly payments. Once he had paid all of the 60 months agreed upon, he was free from debt.

£10,050 Debt Level IVA Case Example

Once, one person accumulated a debt that totalled £10,050 after losing their job. After losing their job, they could not keep up with the monthly payments for their car and became liable for the shortfall. When they found a new job, they discovered that they could still make the monthly debt repayments. They then worked with an insolvency practitioner to submit an IVA proposal to their creditors. The creditors accepted the proposal, and their monthly payments were lowered from £720 per month to only £120 per month. The final amount they had to complete was £7,200, while the rest was written off once the payments were completed.

£12,100 Debt Level IVA Case Example

Another IVA case example showed a debtor falling into debt after buying and moving into a property. The move made a big dent in his finances since he could not properly adjust and prepare for the move. He used his credit to help pay for all the bills but soon enough, he fell behind his monthly repayments. He chose to explore how an IVA could help him and soon submitted a proposal accepted by his creditors. His monthly payments were adjusted from £305 per month to £100 per month, and he was required to repay £8,000, while the rest will be completely written off once he completes his IVA terms.

£15,006 Debt Level IVA Case Example

At a £15,006 debt level, another IVA case example was hard to settle the £560 monthly payments. After they submitted and were approved for an IVA, their monthly repayments were lowered to £250, with all the interest and charges frozen until they completed the 60-month payment period. After they paid for the entire amount, they are now debt-free.

£19,220 Debt Level IVA Case Example

One IVA applicant has a total debt level of £19,220 with £562 monthly repayments. With an IVA proposal submitted and ultimately accepted by the creditors, the debtor now has a new monthly repayment minimum of £180. After the debtor has completed repaying a total of £10,800 for 60 months, they are now done repaying debt, and the remaining debt is written off.

£21,070 Debt Level IVA Case Example

After incurring a total debt of £21,070 from credit cards, loans, and other credit facilities, one debtor made monthly repayments of £500. They soon chose an IVA as their preferred debt solution, reducing their monthly repayments to £250 for 60 months. After the debtor managed to pay £15,000, the remaining debt was written off.

£25,344 Debt Level IVA Case Example

This IVA case example showed the client initially paying £600 every month to pay for their total debt of £25, 344 before applying for an IVA. After they submitted an IVA proposal and were approved by their creditors, the monthly repayments was reduced to £240 for 60 months for a total debt payment of £14,400. Once the £14, 400 is paid, the debt is cleared, and the rest of the amount is written off by the creditors.

£32,000 Debt Level IVA Case Example

In this particular example, the debtor owes £32,000. Unfortunately, the debtor’s spouse fell ill and had to spend time in the hospital. This forced the debtor to take a break from working to take care of their family and spouse. Because of this, the debtor no longer had sufficient income to support their family and meet their loan repayments simultaneously.

While still staying up-to-date with the payments, the debtor chose to submit an IVA proposal as the best course of action for him. After the creditors accepted the IVA, the debtors’ monthly payments were lowered to £200 per month from £706 per month.

When the debtor has completed the payments over the agreed period of 60 months, he has successfully paid £12,000. The remaining debt of £20,000 will then be written off.

£42,021 Debt Level IVA Case Example

At a £42, 021 debt, one debtor was paying more than £800 per month. When they explored various debt solutions, they found that the IVA was the debt solution. With the help of the IVA, their monthly repayments were lowered to £250 per month.

Once the debtor completes paying for £250 for 60 months, they paid £15,000 in total and the rest of the total debts written off.

£84,555 Debt Level IVA Case Example

One of the biggest challenges of being self-employed is paying for everything yourself. This makes it easier for them to accrue debt.

One IVA case sample shows one self-employed person paying more than £1200 on monthly payments to settle their debts, totalling £84, 555. They sought good debt advice and opted for an IVA as their debt solution of choice. The IVA reduced payment to £510 in monthly debt repayments. After completing the 60-month payment period, all of the remaining debts were written off.

Payment Break

If your financial circumstances changed during your IVA and you were unable to make your payments, you might take a break for a few months until you could get back on your feet. You’ll need to inform your IP of your new circumstances, but he has the authority to grant a six-month payment respite without addressing your creditors. Any missed payments will be added to the end of your IVA, but the remainder of your debts will be written off as agreed once it is completed. Payment breaks are perfect for short-term adjustments, such as losing your job, breaking your boiler, or needing to pay for an emergency auto repair.

Payment Break Case Example

A good sample of a case that needed a payment break was with a couple expecting a baby. Before learning that they were expecting, the couple was paying off a debt that totalled £30,000 with a £310 monthly debt repayment. After learning that they were pregnant, the expecting mother will be taking maternity leave which will significantly reduce their income for the next six months. The couple studied various debt solutions and came upon IVA to prepare for this. The IVA awarded the couple with a six-month payment break and a new computed monthly payment requirement of £150, considering the additional expenses they will be incurring.

6-year Payment Period

The IVA payment period usually lasts for five years. However, if the creditors decide that the percentage of the monthly repayments they will be receiving is too low, they can extend the payment period for another 12 months.

6-year Payment Period Case Example

The 6-year payment period case sample examines a manager who previously had a large income but was then dismissed from the job. The manager found another job but was receiving a considerably lower income, which meant that he could no longer pay for his credit card bills, store cards, and unsecured debts, which amounted to £100,000.

The manager applied and was granted an IVA. Still, because the creditors will receive low returns within five years, he altered his proposal to run over a six-year payment period instead. The creditors accepted the proposal even though the returns would be lower.

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Making a Full Repayment

Sometime during your IVA, your financial circumstances may change for the better. You may then afford to make full repayment of your debt amount along with all of the interest and charges so that you can finish your agreement earlier.

Keep in mind that if you are in the financial capacity to complete the payment in less than five years, an IVA may not be the best option for you.

Making a Full Repayment Case Example

There was once a married couple who owed more than £20,000 together. Their debt came from various loaning facilities such as credit cards, store cards, and pay loans, with up to 22 different creditors asking them for payments.

The couple sought debt advice and were leaning towards availing of an IVA. However, after going through their finances, they found that they are capable of paying for the entire loan in full in only around 4 years. The downside to making the full repayment and not going with the IVA was that six out of the 22 creditors had already declared that they would not be freezing the interest and charges of the debts. Because of this, the couple opted for the IVA instead and paid their debt in five years.

Third-party Contributes to Monthly Payments

There are times when a debtor cannot afford to pay for their monthly debt repayments but want to avoid declaring bankruptcy. When this happens, the option to have a third party contribute to the payments can be discussed. The contributing third party can be a relative, a partner, or a parent, to name a few.

Third-party Contributes to Monthly Payments Case Example

A third-party contribution case sample shows a factory worker who had accumulated a total of £30,000 in unsecured loans. Because he owned the property, he was currently living with his wife and children, and he wanted to avoid declaring bankruptcy. However, after making computations while considering their current living costs, they found that he could not meet the monthly repayment costs for his debts.

While exploring the debt solutions he could afford, he mentioned that his parents were willing to help him pay his debts. With this in mind, his IVA included monthly contributions from his parents for the entire duration of the agreement. This helped him avoid bankruptcy, and he was debt free after five years.

A Shorter Term Arrangement

If you think that paying for your debts for five years is too long and you cannot afford to pay for five years, you can try to enter into a shorter-term arrangement. A shorter-term arrangement is an IVA with a pay period of less than five years. You can apply for a shorter-term arrangement if you anticipate that you may lose your income in the middle of your agreement, such as when you retire or when you have to leave a job due to an illness.

A Shorter Term Arrangement Case Example

A retiring accountant had an £80,000 unsecured debt from loans and credit cards. Because she lived with her partner, who shared the jointly owned property amounting to £30,000, her computed monthly debt repayments were set at £600 after her living expenses were taken into consideration.

The accountant was set to retire in three years and was not expecting any pension. She also did not like the prospect of filing for bankruptcy because of her profession, so she opted for an IVA with a shorter-term arrangement. In her IVA, she paid £600 every month for three years. Because of her financial outlook, her creditors agreed to the arrangement and wrote off a majority of her debt.

A Shorter Term Arrangement with Lump Sum

A shorter-term arrangement with a lump sum is ideal if you expect to receive a large amount of money in the near future.

A Shorter Term Arrangement with Lump Sum Case Example

One police officer had owed around £40,000 of unsecured loans and credit card debts. A quick IVA computation showed that she could afford to pay £300 to settle her debts. She informed her insolvency practitioner that her police pension came with a £30,000 that she could use to help pay off her debts. Her creditors agreed to the £300 monthly repayment amount for two years and would only take £15,000 from her pension, leaving her with half to support her retirement. S

FAQ

How is an IVA calculated?

IVA capitalises on offering affordable monthly payments. The payments are calculated, with the most important factoring being an analysis of your household costs and your income. Debt advisory companies have a standard of industry-recognised allowances for each area of the average household budget that they use when computing. These allowances include food, housing, utility bills, clothing, travel, communication costs, and well-being costs.

The minimum IVA repayments most creditors accept to stand in for the least amount you can pay into your IVA for you to settle at least 25% of your original debt.

What is the minimum IVA payment?

There is currently no minimum IVA payment set in the industry. However, most creditors are willing to accept the IVA proposal if you show that you cannot afford to pay a reasonable amount each month.

Can I pay off my IVA early?

Yes, you can pay off your IVA early. In most cases, paying you IVA early with a full and final settlement will be advantageous for you.

Contacting Debt Charities

If you still feel doubtful and a little confused, you can get in touch with debt charities that give you free debt advice. They can also help you find the best debt repayments plan that fits your lifestyle.

Summary

An Individual Voluntary Arrangement can help you settle your debts and live a debt-free life. These examples can give you an idea about how the IVA works and how it can help you. We hope that you found the guidance you need in considering IVA as the debt repayment plan to choose.

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IVA Debt Help Information

If you want to know more about the debt help plan of an IVA we have all articles related to individual voluntary arrangements here: