A monthly payment IVA means making reduced payments towards your debts for 5-6 years. Before you agree to the plan you must ensure you can afford to pay and sustain these.

• Can you afford the monthly IVA payment?
• Can you sustain the payments

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Can you afford to pay the required IVA payments?

There are no set rules guiding the amount that you need to pay into an IVA. You will always be required to pay as much as you can afford. Your payment each month will be based on your disposable income.

This is the amount left over from your income after all your reasonable living expenses are taken into account. The figure may rise or fall depending on the amount you owe and whether the amount you can pay will change during the Arrangement.

You may also be able to offer a full and final payment thus settling the IVA immediately. You will not make any monthly payments at all using this type of agreement.

Generally speaking the minimum amount you must be able to afford to pay into an IVA is £100/mth

Can you sustain the monthly payments?

If you are planning to start an IVA not only do you need to be able to make monthly payments but you also need to be reasonably confident that you can sustain these.

Of course no one can see into the future and guarantee that you will remain employed or that your income will not change. However, you will need to prove your income is sustainable at the time you start the Arrangement as far as you know.

You may be self employed or run your own company. If so proving you can sustain your IVA payments is done differently. A cash flow forecast will be used to show the amount you are likely to earn in the next 12 months.

If your income is currently uncertain it might be best for you to use a temporary debt management plan until it is more permanent. If you have recently started a new business you may have wait for six months to generate a trading track record before applying.