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A good starting point for IVA questions
Hi there, hoping someone can give me a little clarity about IVAs please.
I've seen on other forums, people saying not to get IVAs, but others say do. I have around £6500 worth of debt currently, and one of my co-workers suggested I do the same as her, and put all my debts together and just do one monthly payment. My debts are from council tax, unpaid student overdraft and a payday loan. I've been looking online and researching and it seems like she's talking about an IVA. But some say not to do an IVA and I'm wondering why not? I am only earning less than a grand a month currently, so I cannot afford to pay them off any other way. I was going to see if I can be approved for one but would appreciate some info on whether its the best thing to do for my situation ?

Thanks in advance!
Hi Melanieee. Welcome to the forum :)

I would question whether an IVA is the right solution for you. You would need to make a minimum monthly payment of £100. The payments will last 5 years. Some IVA companies may say they can help you for less (perhaps £80/mth). But you can be sure they will look to increase your payment in later years.

Given this, you will end up repaying at least £6k over the duration of the agreement. That is OK. However you also need to understand that IVA payments are not fixed. They will increase if your income goes up. You also have to pay 50% of any overtime or bonuses you get over the whole 5 year period.

Given this you can see that in your situation your payments would not have to go up be much before you are actually paying back more than you owe.....

Because you only owe just over £6k, I would recommend that you do not go down the IVA route. I would suggest you look into the option of a debt management plan. This is a simple agreement with your creditors to reduce the payments you make to fit within the budget you can afford (say £100/mth). You can get the agreement set up for free using the debt charity called Step Change. They will ensure interest and charges are stopped.

If you are paying £100/mth it is going to take you just over 5 years to repay your debt (so the same as an IVA). But it is a flexible agreement. If you are able to because your circumstances improve down the line, you can pay more to repay everything quicker. But unlike an IVA, you are never going to be put in the position where you have to repay more than you owe.
Thank you Haydon. I will take a look at debt management plans instead. I didn't know that about the 50% overtime, and I was under the impression the rate would be fixed, so you've given me a lot more info than I had found prior :) thank you
No problem Melanieee

It is a common problem that people start IVAs without really understanding the implications. A lot of IVA companies don't seem to explain the full story when they are "selling " the solution.....

If you have more questions please don't hesitate to come back to us :)