IVA Spending Restrictions – Living Expenses Guide

IVA Spending Restrictions

An Individual Voluntary Arrangement (IVA) is a great debt solution to take care of your debts but many people overlook the fact that they have to abide by a strict set of rules when they’re in one. 

There are a number of restrictions that are placed on you which you need to be aware of if you want to keep your IVA running smoothly.

In this post, I’ll be looking at what these restrictions are as well as give you some advice on how you can ensure that your IVA is successful.

How do I Manage My IVA Budget?

The reason why so many people opt for IVAs as opposed to other debt solutions is mainly because of two reasons:

  • the first one being that you can get a significant portion of your debt written off.
  • The second one being that you will never be obligated to pay more than you can afford. 

Your insolvency practitioner sits down with you and assesses your income and expenditure and in the end, your monthly payments are devised. Your monthly payments will be devised only according to what you can afford. That being said, being in an IVA implies that you will contribute all of your spare income towards your IVA payments.

This means that you are only allowed to spend your income on essential living expenses. You cannot use any of it for luxury or unnecessary purchases. The remainder of your income is all to be given to your monthly payments. This is something that you will have to abide by throughout the entire duration of your IVA which could be five years or more (it could be earlier than five years if you decide to opt for a full and final offer with a lump sum payment). 

Thus, when you’re considering an IVA, be sure that you’re mentally and financially ready to stick to a budget for the next five or so years. It’s also important that you seek advice from your IP before you make any major purchase during an IVA. You don’t want to accidentally violate the terms of your IVA which is why it’s essential that you discuss your purchases with your IP beforehand. 

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Can I go on a Holiday During My IVA?

Yes and no. If you’re considering a holiday or a trip in order to go see friends and/or family, you may be able to work something out. You will, however, need to work within your budget. 

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Additional Income Threshold

Once your IVA is approved and registered, your IP will inform you of your additional income threshold. This is a figure which tells you how much additional income you can earn without having to pay it towards your IVA. This amount is typically 10% higher than the income you have listed in your original IVA proposal. So, as long as the additional income is less than 10% of the monthly income you have listed in your IVA proposal, you can use it for whatever you want.

A good idea would be to save up this additional income over a few months in order to fund your holiday. You could get this additional income by working extra hours or through bonuses or commission, etc. 

Funding a Holiday Over Months

Funding a holiday immediately will definitely be very difficult for you which is why the best course of action would be to save up your money over several months to eventually fund it. 

Never Borrow Money

It’s important to note that you must never borrow money in order to go on holiday. Your IP will never approve this and if you do it without informing your IP, then this will be in direct violation of the terms of your IVA and as a result, your IVA may fail.

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Living on a Budget 

Your IVA proposal includes your proposed budget on its last page. Your budget is calculated by taking your income, your monthly expenditure and your debts into account. For a lot of people, an IVA is the first time they’ve actually sat down and planned a budget for their household.

For many others, this may be the first time they’re having to stick to a budget without making use of credit. Odds are that if you’ve had trouble with debt management in the past, then you may have trouble managing your budget as well. This is why many people tend to fail or miss payments towards their IVAs when they’re first starting out.

It’s essential that you learn to be financially disciplined and stick to your proposed budget in order to keep your IVA running smoothly. If you feel that you’re having trouble managing your budget, you can go to your IP for advice and information. They may be able to figure something out. 

It’s important that you think thoroughly about all of your living expenses and be extensive with the information you provide when you’re putting together your budget. You will have to provide proof and documentation about both your income as well as your expenditure when you’re putting together a budget with your IP. This could be in the form of bank statements, receipts, payslips, etc. – please note that your IVA monthly payments will be devised according to the figures you provide.

If you miss something related to your living expenses, then you may be put in a difficult situation where you’ll have to choose between essential living expenses and your IVA payments

It’s also important for you to include monthly allowances for essential annual expenses within your budget. An example of this would be MOT costs if you have a car. It’s important that you put some money aside for costs such as these every month so that when the time comes every year, you already have the money ready to go. 

It’s always best to be on top of annual expenses such as these so that you’re not caught off guard when they do come up. If you’re not prepared for such payments, you may end up missing your IVA payment or paying it late which could put its success in jeopardy. 

Keep an Eye on Your Income

I’ve mentioned earlier how there’s typically a 10% threshold of additional income that you can earn which you can keep to yourself. If you start earning anything more than that, then you’re going to have to inform your IP of it.

Please note that you are obligated to do this and if you fail to report this to your IP, then your IVA may fail and your road to becoming debt-free may become a whole lot rockier. Once you inform your IP of your income increase, he/she will work out the changes needed to your IVA payments. 

Please note that you have to do the exact same thing if your income decreases as well. Go to your IP and inform them of this and they will work out your IVA payments. Your IVA payments will be lowered to ensure you can afford them. 

Emergency Expenses 

The budget you provide in your proposal typically has provisions put aside for emergencies which aren’t part of your essential living expenses each month. This is money that you put aside each month in order to build an “emergency fund” overtime in case any unexpected expense arises. 

However, if the money you’ve put aside isn’t enough to cover your emergency expense, then it’s a good idea to seek further advice from your IP. Depending on your circumstances, they may be able to give you a payment holiday or lower your IVA payments so that you are able to get some breathing room to pay for your emergency expense. 

Seeking Advice from Your IP 

It’s essential that you communicate your situation with your IP regularly. Remember that they are there to facilitate you and ensure your IVA is a success. If you’re having trouble with debt management or your budget, it’s important to talk to them. If you have any questions or confusions about your debt or the way you’re going to pay it back, you can talk about this with your IP too.

Many people who enter into IVAs consider IPs to be the enemy rather than allies and it really hurts the success rate of their IVAs because they are unable to get essential information which could help them succeed and become debt-free. 

Your IP will typically be enough for all the information you need but if you want further debt advice, you can get it from independent charities such as StepChange or Payplan

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Can I save money while on an IVA?
Yes. Although it will be harder and it will take longer to save, it is possible. Your IVA payments will allow you to save small amounts.
Can I take out a phone contract while in an IVA?
Yes. There is nothing to say you cannot take on a mobile contract whilst on an IVA but it may take up a portion of your budget and limit your IVA payments.
Why does an IVA stop you doing?
An IVA stops you from spending excessively. On an IVA you do not have unlimited freedom on what you spend your money on as you need to meet your IVA obligation.
Can you get married while in an IVA?
Yes. An IVA is an individual arrangement and therefore does not require anything from your partner.
What is classed as a windfall in an IVA?
A windfall is when you receive an unexpected quantity of money like winning the lottery, inheritance or getting a large bonus.


Managing living expenses with an IVA can be hard but as long as you stick to your budget and be communicative with your IP, you’ll be able to get through it in no time. 

I hope you found this information to be useful and also hope it will help you on your journey to becoming debt-free.


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  • Affordable repayments with an end date in sight
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