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Managing an IVA

Individual voluntary arrangement. IVA budget tips

Due to the formal nature of individual voluntary arrangements (IVAs), it may seem that it would be a struggle to accommodate unexpected expenses such as car repairs. However, in some cases, IVAs do allow for a certain degree of flexibility.

Should you find yourself dealing with an unexpected expense during your individual voluntary arrangement, you should deal with it as quickly as possible. Your IVA provider is in the best position to help you if you’re facing difficulties. In the meantime, here are some practical tips to help you manage. 

IVAs are arranged by StepChange Voluntary Arrangements, part of StepChange Debt Charity. In Scotland, a protected trust deed is a similar solution. This has different benefits, risks and fees.

Get some breathing space

Don’t deal with stressful situations alone. Once your IVA provider is aware of the problems you’re facing, they should do all they can to assist you.

Payment breaks can give you a temporary reprieve while you cover emergency costs. It’s at the discretion of your IVA provider in terms of how long they last, but you‘re allowed to explain the situation and see if a payment break is available.

Here are just a few of the situations where a payment break may 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 usually provision in your IVA budget to put money aside for emergencies every month. It’s a good idea to have a second basic bank account, usually with a bank you don’t owe any money to and with no overdraft facility, for costs you don’t need to cover every month, such as birthdays, Christmas, or road tax.

Find out if you can get financial assistance

If you’re suffering from a ‘cash crisis’ such as not being able to buy food, emergency financial assistance may be available to you.

Local authorities can sometimes offer emergency funds, and food banks can assist if you’re struggling to cover costs.

Whenever possible, save money each month for emergencies so you have some funds available if the unexpected happens.

If you’re facing a cash crisis or emergency, it indicates that your IVA isn’t working well. If this is the case, you must tell your IVA provider as soon as possible so they can look at your options. 

Clare Lindley and James O'Carroll of StepChange Voluntary Arrangements are licensed to act as insolvency practitioners in the UK by the Insolvency Practitioners Association.

Get a quote for any work or repairs

It’s a good idea to calculate how much money you’ll need to cover the emergency expense you’re dealing with. 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 find. MoneySavingExpert.com has some great tools to compare the prices of goods online.

Stay away from extra credit

Don’t take out a loan or credit card to cover an emergency cost. Taking out extra credit or a loan on an IVA can jeopardise your IVA and may result in it being terminated. This is because your IVA was set up on the understanding that you’d take out no credit higher than £500. If taking out credit seems like your only option, you must get in touch with your IVA provider.

Ask for help

Fluctuations in your spending over the years are inevitable, and most people will face an unexpected expense at some point in their lives. However, most creditors are very understanding and should work with you to come to an agreement. So keep this in mind, and don’t be afraid to speak to your IVA provider if your IVA isn’t working for you.

StepChange Voluntary Arrangements is a registered trading name of Consumer Credit Counselling Service Voluntary Arrangements Limited, a wholly owned subsidiary of StepChange Debt Charity.