iva examples

You can find an endless amount of example cases for Individual Voluntary Arrangements (IVAs) if you look online.

Example cases can be very useful as they can help you understand why IVAs are a viable way of taking care of your debts and they can also help you determine if they would be right for you.

In this post, I’ll be providing you with a number of example cases so that you can judge for yourself whether or not an IVA is the debt solution for you. 

What is an IVA? 

An IVA is a debt solution in the form of a formal and legally-binding agreement between you and your creditors. 

It states that you will make affordable payments every month towards your debts for an agreed-upon period (typically 60 months) and after this period is over, you will be debt-free. 

Even if you haven’t paid off your debt in full, you will still be debt-free once the IVA period is over. 

Also, remember that your monthly payments will always be affordable. You will never be pressured to pay more than you can afford. 

Let us look at some examples of how IVAs work in order to get a sense of how they can help you make your payments in a manageable way and help you become debt-free. 

Most IVAs last 60 months but depending on your circumstances and the terms of your IVA, it could be more or less than 60 months as well. 

Example Cases for IVAs

Example 1

Ms M was having a hard time paying her debt repayments which were £470 per month. After contacting an insolvency practitioner and setting up an IVA that got accepted, her monthly payments were reduced to £160 per month. This was much more affordable to her and helped her live a relatively stress-free life as she paid off her debts. Not only was the amount she paid reduced but she was also legally protected from her creditors throughout the entire period. At the end of her IVA, she’d paid off 64% of her debt while the remaining 36% had been written off. 

what is a iva 60 monthly

Example 2

Mr W was paying his creditors over £920 per month and he felt like this would never end as interest and charges just kept mounting and drowning him in debts further and further. He figured that an IVA would be the best course of action. Once it was accepted by his creditors, his monthly payments were brought down to £350 per month. Not only that but as part of the conditions of an IVA, his creditors were obligated to freeze any interest and charges they may have. Thus, the amount Mr W owed would not increase over the course of his IVA. 

Example 3 

Mr and Mrs J live in their jointly-owned house and have a 3-year-old son. Between them, they have debts totalling £30,000 which are made up of credit cards, personal loans and store cards. Their monthly payments towards their debts over £800.

Mr and Mrs H had no trouble maintaining their repayments of £800 until their son was born. The additional cost of taking care of their son soon resulted in their finances becoming unable to manage. They started using their credit card for loan repayments which resulted in them accruing credit card debt. This constant build-up of debts resulted in their credit scores going down and them reaching a point where they could not obtain any more credit. 

After weighing all their options and looking at debt solutions, they opted to apply for an IVA. Their IVA proposal was approved and as a result, they will now pay just £120 per month for five years.

Please note that this £120 count towards each of their debts. At the end of their five years, they will have paid a total of £7,200 which is much lower than the amount they actually owed which was £30,000.

Example 4

Mr T & Miss S made most of their major purchases by borrowing money. This eventually caught up to them and their debts reached an unmanageable and unaffordable level. 

They decided to get a debt consolidation loan and while this effectively reduced the money they had to pay, their finances were still in a bad state. 

They have one son who is disabled. 

They opted to get an IVA. An IVA proposal was devised by them and their insolvency practitioner and presented to their creditors; It was accepted. 

Unfortunately, their son’s health deteriorated 6 months into the IVA duration and as a result, Miss S had to quit her job in order to take care of their son. 

Due to Miss S leaving her job, their IVA repayments became unaffordable and their IVA was at risk of failing. 

After exploring their options, Mr T’s parents suggested that they would be willing to provide a large lump sum of money for a ‘full and final’ settlement offer to the creditors. 

This large lump sum of money was offered to the creditors as a part of the full and final settlement offer. It was accepted and as a result, Mr T and Miss S are now debt-free. 

Example 5 

Miss G is aged 35 and lives in a rented space. She had a total debt of £14,000 and was paying £450 per month as repayment towards her debts. 

She was having little to no trouble at all making her repayments until she was fired from her job. Unable to secure a job, Miss G had no other option but to rely on credit in order to make her monthly debt repayments. 

Even when she did finally secure a job, her salary was much lower than what she had previously. This was very worrying because not only did she owe money to her original creditors now but she also had credit card debt piling up as well. She also had late payment charges and arrears to worry about as well. 

Recognising that the debts she had had reached a level that was overwhelming, she decided to seek debt advice from a professional. The debt advice she was given was to look at different debt solutions so that she could afford monthly payments and take care of her debts in a manageable way. 

After looking at her options, she decided to propose an IVA to her creditors. 

Miss G now pays £150 per month under her IVA and all interest she had on her debts has been frozen. Her IVA will last 60 months (five years) during which she will pay a total of £9,180 in the form of payments. After the 60 months, her remaining debt will be written off. 

Contacting Debt Charities

If you’re still unsure about whether or not an IVA could be right for you, you can seek free debt advice from independent charities such as StepChange or Payplan

Conclusion 

Many people are confused about how an IVA can really help them get rid of their debts and looking at example cases such as the ones described above really helps put things into perspective. 

I hope you found this information useful. Let me know if you have any further questions.

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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