Many people struggle with debt, but with the help of various debt solving options, like Individual Voluntary Agreements (IVAs), you may be able to clear your name and be debt free. Before taking out an IVA, various procedures have to be followed, including sitting down and listing your monthly expenditures. Your Insolvency Practitioner (IP) will help you work out your monthly expenditures, making sure you include all necessary expenses.
These monthly expenditures will include:
- Water and rates
- Life insurance and any other insurance policies
- Child education
- Food and household utilities
- Personal hygiene
- Breakdown recovery
- Pet necessities like food and vet bills
- Contingency (money put aside for unforeseen emergencies)
- Remember that this allowance does not cover socialising, smoking, entertainment, gambling etc.
Your IP will give you a monthly allowance which allows you to take care of all your basic needs. During your IVA, your IP will perform regular reviews to make sure you are keeping up with your payments. These reviews usually occur every 6 months, but can differ.
During these reviews your IP will also check to see if your financial situation has changed in any way. If it has changed for the better and your income has increased, your monthly IVA payments will most likely increase. If however, your situation has taken a turn for the worst; your IP may contact your creditors and explain the situation. If you have maintained your payments in a committed fashion, your creditors may be in favour of changing the IVA proposal to better suit your needs.
Remember that opting for an IVA is supposed to make your life easier, not more difficult. You may feel that living such a frugal lifestyle is beyond your means, but this is just a temporary situation. Think of the long term benefits and in a few years time you will be enjoying a lifestyle that is free of debt.