If you are applying for an Individual Voluntary Arrangement (IVA) you will need to complete a monthly living expenditure budget as part of your Statement of Affairs. This is a list of all of the reasonable living expenses that you incur every month.
It is very important to get this budget right because the total of your expenditures will deducted from your income to calculate your disposable income which is the amount you will then be expected to pay into your IVA.
The risk is if you underestimate the amount you spend on any of your regular living expenses or miss some expenses out completely your total budget will be too low. When this is deducted from your income your disposable income figure will be too high making it look as though you can pay more into the arrangement than you really can.
BMD Tip: If you agree to payments based on a disposable income figure which is too high the arrangement is likely to fail as you will not be able to afford to maintain them.
How to get the IVA Living Expenses Guide
To get an accurate view of which types of living expenses are reasonable and to make sure that you include all allowable expenses in your budget you should download the BeatMyDebt.com living expenses guide.
The guide lists all of the different types of expenditures you should consider when completing your monthly budget together with hints and tips about the budgets which you will have to stay within to ensure that they are acceptable to your creditors.
You can download the guide by submitting your e-mail address here:
How to use the IVA Living Expenses Guide
When you use the guide to help you put together your living expense budget you may feel that some of the figures seem restrictive. Despite this they are known to be generally accepted by creditors and so if you want your IVA to be agreed you should try stay within the budget figures shown for each category.
Having said that as its name suggests the guide MUST be used for guidance purposes only. Every individual’s situation is different and the actual figures acceptable to your creditors in each category may be higher or lower than those indicated depending on your circumstances.
BMD Tip: If you feel that you need to spend more than the recommended amounts you should always include these figures in your budget. However you must be prepared to justify any additional expenditure and understand that you might be asked to reduce these before an IVA can be agreed with your creditors.
Once you have put together your living expenses budget you should speak to one of our experts who can help you decide whether or not it is reasonable and if an IVA is a sensible solution for you.
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