If you are considering IVA, it is important to do some research on IVA costs. Many people mistakenly believe that IVA is a free service, but this isn’t true. Although the creditors are usually the ones that will absorb the cost of IVA, it isn’t a free service. There are fees involved, and in most cases creditors will agree to these fees because they know that they will likely get more of their money back if they help the debtor to avoid bankruptcy.
When an IVA company brings a proposal to the creditors, they will be presenting your financial circumstances, as well as how much of the debt you will eventually be able to pay back, in addition to how much of that money will be deducted for IVA costs. This will all be taken into consideration before the creditor agrees to the IVA proposal. If the fees are too high, there is a chance that the creditor will not accept the arrangement.
In addition to getting your agreement accepted by the creditor, the IVA costs will also affect your monthly payment; the more the IVA costs, the larger your payment will be.
Negotiating Living Costs on IVA
Also important to how much your monthly payment will be is the process of negotiating living costs on IVA. Due to the fact that you must be able to afford to make your monthly payments, you will not want to agree to a payment that sets your living costs on IVA too low.
To help ensure that you keep to your budget, make it a habit of reducing the amount of money you spend on grocery and hardware items, plus cutting back on your monthly utility consumption. Although tightening your budget will help, you still cannot agree to a budget that is so low that it will be impossible to keep your agreement.
Your creditors will try and get the payment as high as possible so that they are getting more of their money, and they often want the debtor to live on an unreasonably low budget. To avoid the pitfalls of this happening, never agree to a budget that you will not be able to live with, and always ensure that housing costs on IVA are taken into consideration.
To successfully get out of debt with an IVA, you will have to make sure you make your payments on time each month, if your living costs on IVA are too low, this may be impossible. Always make sure this is taken into consideration and find a company that offers the lowest IVA costs to the creditor; this will help keep your monthly payment as low as possible.
Remember, an IVA is meant to help you get out of debt, not cause more financial stress.