IVA stands for Individual Voluntary Agreement and is a kind of debt management system that helps people pay off debts and helps creditors recover debts.
IVAs can be a brilliant solution for many people to get out of tricky financial situations.
If you are considering an IVA, an IVA calculator can enable you to see how much you might have to pay over a period of time to settle your outstanding debts.
In this article, we explore what an IVA is, what an IVA calculator is and why they are so useful.
What is an IVA?
An IVA is a debt management solution used in England and Wales by people who are struggling to repay debts.
They can be quite damaging to credit scores, and take a toll financially, but for many people they serve as firm, but fair, solutions.
IVAs offer an alternative to bankruptcy, and must contain at least 75% of a person’s debts.
One benefit of using an IVA is that creditors agree to wipe a portion of the debt in return for a commitment from the indebted person to repay what they owe under the agreement.
To qualify for an IVA, it’s important that you meet some specific criteria.
As mentioned, you must include 75% of your debts, but you must exclude student loans, child support payments and fines.
You can’t get one if you live in Scotland, unfortunately, but Scottish residents can apply for a Protected Trust Deed, which serves a similar purpose.
There are some fees involved in setting up an IVA, such as paying a licensed insolvency practitioner to set up the plan.
Sometimes this fee is factored into the agreement, however.
These agreements can last up to 6 years and can result in up to 90% of your debt being written off at the end of the agreement.
What is an IVA calculator and why are they used?
IVA calculators are online tools that help people understand how much they might have to pay over the course of an IVA.
Some calculators use a sliding bar, where you can select how much debt you are in, then the tool will tell you how much you would have to pay and how much creditors will write off.
The calculators provide the information by taking data from thousands of other people’s situations, giving the average amount of debt written off for people.
This means that your IVA is not guaranteed to align with the calculator’s results, but it can be a highly accurate illustration of what to expect.
IVA calculators are a great way to see if you can afford to keep up with an IVA agreement, or just to get an idea of what you’ll be paying each month going into the future.
If you’re struggling with debt, feeling a bit overwhelmed and not sure how to move forward, reach out to us today and we can give you some helpful advice and get you back on track.
