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How to deal with unexpected costs on an IVA

IVAs have come a long way in the 25 years they’ve been in existence. You’d be forgiven for thinking they’re incredibly strict and rigid, when the truth is that they’re very flexible.

That said, it’s still worth planning ahead should one of life’s little mishaps rear its ugly head. Should you find yourself with a boiler that needs repair or a broken freezer full of defrosting food, you ideally want to be able to deal with it as quickly (and easily) as possible.

Don’t panic about unexpected costs

Take a deep breath, make a cup of tea, or talk to a friend – do whatever you need to do to get that initial jolt of panic out of your system.

It’s really important to remember that we speak to many of IVA clients every week, and a fair portion of them are hit with emergency costs, much like the one you may be experiencing.

Most of the time, whatever is worrying you at the moment can be remedied quickly once you’re given time to think calmly about what to do next. You can speak to us on a weekday 9am – 5pm about whatever’s worrying you, and there’s also a wealth of information on our IVA clients page for situations just like this. Remember you can always email us at supervisory@stepchange.org.

Get some breathing space

Don’t deal with stressful emergencies alone. There are lots of things we can do to keep your IVA afloat while you get your bearings.

Payment breaks can give you a temporary reprieve while you cover emergency costs. They can last as long as six months if necessary, and we don’t always need to consult your creditors in order to put the break in place but you do need to speak to us first to get approval from the Supervisor of your IVA

Here are just a few of the situations where a payment break might be appropriate:

  • Maternity
  • Job loss
  • Illness
  • Separation/Divorce
  • Unexpected expense (e.g. broken boiler/car repairs/expensive vet bills)

Stick to your budget

There’s provision in your IVA budget to put money aside for emergencies every month. It’s a good idea to have a second bank account (with a bank you don’t owe any money to and no overdraft facility) to transfer money into, for costs you don’t need to cover each and every month, such as birthdays, Christmas or road tax. Whenever possible save money each month for emergencies and fingers crossed anything out of the blue will be kept to a minimum.

Get a quote

It’s a good idea to calculate how much money you will need to solve your problem. Get several quotes for any work or replacement products needed, and check in stores or online to see how much similar or replacement goods are.

It’s important to know how much money you need to aim to find. MoneySavingExpert.com has some great tools which you can use to compare the prices of goods online.

Stay away from extra credit

Whatever you do, don’t take out a loan or credit card to cover an emergency cost. Taking out extra credit on an IVA can be the kiss of death, as your IVA was set up on the understanding that credit no higher than £500 would be taken out. 

Ask for our help

Ultimately, fluctuations in your spending over the years are inevitable. The cost of living has gone up markedly, and fuel costs slow little sign of slowing down. On the back of this, changes to benefit entitlements could leave you with more or less money in your pocket.

If you find that after taking a payment break or using your emergency fund that you’re still struggling, speak to us. 

Most creditors are very understanding and will work with you to come to an agreement that everyone is happy with. So keep this in mind, and don’t be afraid to speak to us if your IVA isn’t working for you.

Now that we’ve looked at emergency costs, you’re hopefully feeling a bit more relaxed about the future, and secure in the knowledge that we’re here for you, always. If worries persist however, don’t be a stranger – call us and see how we can help. 

Got feedback on this article or a question about your IVA?

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Foundation for Credit Counselling Wade House, Merrion Centre, Leeds, LS2 8NG trading as StepChange Debt Charity and StepChange Debt Charity Scotland. A registered charity no.1016630 and SC046263. It is a limited company registered in England and Wales (company no:2757055). Authorised and regulated by the Financial Conduct Authority.

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© StepChange Debt Charity 2017