How much does an IVA leave you to live on?

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This guide will explore IVAs in more detail, including how IVA payments are calculated and if you can lower your IVA payments.

When you enter into an Individual Voluntary Arrangement (IVA), your monthly payments will be based on details you provide about your income and expenditure. This is to ensure you can afford to repay your debt alongside your other financial responsibilities and never miss a payment.

However, while an IVA is designed to ensure you never pay more than you can comfortably afford, it’s normal to worry about not having enough money left over for essential living costs, such as rent, groceries, and utilities.

What is an IVA?

An IVA is a formal agreement between you and your creditors (the individuals or companies you owe money to) to repay your unaffordable debt through a series of monthly instalments.

IVAs can be used to repay a wide range of unsecured debts, such as personal loans, council tax arrears, rent arrears, and gas and electricity arrears, but they can’t be used to repay mortgage arrears, court fines, or student loans.

When you enter into an IVA, all interest and charges will be stopped and your creditors won’t be able to contact or harass you about the debt. This can help you focus on repaying what you owe with minimal distractions.

Most IVAs last five years (60 months) but your term can be extended by 12 months if you’re unable to release equity in the final year of your arrangement or you need to make up for missed or late payments. When your IVA ends, any remaining debt will be written off and you’ll be free to move on with your life.

An IVA can only be set up by an Insolvency Practitioner (IP) who will be your first point of contact throughout your arrangement and communicate with your creditors on your behalf.

How will an IVA affect my credit rating?

When you have an IVA, it will be added to your credit file for six years. This will automatically lower your credit score and make it difficult to be approved for a loan, mortgage, bank account, or phone contract.

This also means that, if your IVA lasts for the standard five-year term, it will remain on your credit file for another 12 months after you exit your arrangement. Most people prefer to wait until an IVA has been removed from their credit rating before applying for further credit.

Because your credit record is one of the first things a lender will look at when you make a credit application, an IVA can lower your chances of being approved as it indicates you’ve struggled with debt repayment in the past.

How are IVA payments calculated?

IVAs are primarily based on affordability, meaning you’ll never be asked to pay more than you can afford. However, payments are also based on the size of the debt, your financial situation, and the amount your creditors expect you to repay towards the debt each month.

With this in mind, your IVA payment will be a result of the amount of money left over after all your essential living costs have been deducted from your net earnings. This is calculated through an analysis of your household income and expenditure.

For example, if you earn £2,000 a month and your total living costs come to £1,750 a month, your IVA payment will likely be set at £250 a month. This is to ensure your essential living costs are being met and you’re paying as much as you can towards your debt.

So if you owe £25,000 in total, you’ll be discharged from your IVA after five years (60 months) having only repaid £15,000 (60 x 250) and the remaining debt (£10,000) will be written off.

What is the minimum IVA payment?

There is no minimum payment needed for an IVA and you can apply as long as you can contribute a reasonable amount – usually £100 – towards your debt each month.

However, most creditors will request that you repay at least 25% of your original debt over the course of your five-year term before they agree to an IVA.

If you have little to no money left over after your essential living costs have been met, your creditors will likely reject your IVA and you will be advised to seek out an alternative debt solution, such as a Debt Relief Order (DRO) which you can apply for if you have less than £75 left over at the end of the month.

How much can you save with an IVA?

The main purpose of an IVA is to make your debts more manageable by reducing the amount of money you’re repaying each month.

For example, if you’re currently paying £500 a month to your creditors, an IVA can cut your debt repayment amount by up to 81% so you’re only paying £95 a month. This may sound like it wouldn’t be financially beneficial for your creditors but they will be more likely to agree to an IVA if it means they will receive the money they are owed in regular instalments as opposed to nothing at all.

When you’re in an IVA, any money not going towards your essential living costs will be expected to be paid into your IVA. This means that, while there is no limit to how much you can save every month, any savings will likely have to come from the amount earmarked for your basic living costs or any extra earnings you’ve been allowed to keep.

What is an IVA budget?

When you enter into an IVA, you’ll be expected to stick to a set of spending rules and restrictions to ensure your IVA is successful and can come to an end after five years.

Before submitting your IVA proposal, your IP will review your income and expenditure. This will form the basis of your IVA budget that you’ll be expected to follow for the duration of your arrangement.

An IVA budget should cover all essential living costs, including:

  • Rent or mortgage arrears
  • Utilities (gas, electricity, and water)
  • Communication
  • Broadband
  • Clothing
  • Transport
  • Food

How much does an IVA cost?

The total cost of an IVA differs from person to person, but you’ll never be expected to make additional payments or pay hidden fees at any point during your arrangement. This is because most – if not all – fees will be automatically deducted from your monthly repayments.

IVA fees can be divided into three separate areas: nominee fees, supervisor fees, and disbursements. Here is a quick guide to each fee and what it covers:

Nominee fee

The nominee fee is the charge for all activities taken up until the moment the IVA is approved and essentially covers the cost of your IP getting your IVA proposal drafted and sent to your creditors. This amount can range between £1,000 and £2,700 but is often capped at your first five IVA payments.

There will be no nominee fee to pay if your IVA isn’t approved.

Supervisor fee

The supervisor fee covers the day-to-day costs involved in managing an IVA and is usually set at a rate of between 15% and 18% of your IVA payments. This amount covers the cost of distributing payments to your creditors, handling correspondence, and completing annual reviews.

The supervisor fee is usually due after your IVA has been approved and your nominee fee has been paid.


Disbursements cover the various costs paid to third parties involved in setting up and maintaining your IVA, such as registration and insurance.

The amount you’ll be expected to pay will be clearly outlined in your IVA proposal and must be agreed upon by you and your creditors before your IVA is approved, meaning you should never be caught out by unexpected expenses at any point during your arrangement.

What is the additional income threshold?

When your IP is calculating your IVA payments, they will work out how much additional income you can keep before it must go towards your arrangement. This is known as your additional income threshold and is usually set at around 10% of your monthly income.

For example, if you earn £1200 a month, you will only be able to keep the first £120 of any additional income earned. For additional income above this, 50% must go towards your IVA. This means that, if you earned an extra £100, you’d be able to keep 100% of the £100. However, if you earned an extra £125, 50% must be paid into your IVA and you’d only be allowed to keep £62.50.

What can I do if I’m struggling to pay my IVA?

IVA payments are based on information you provide about your income and expenditure so you should never struggle to afford basic necessities, such as housing, food, or utilities. However, if you are worried an IVA could push you into financial hardship, there is help available.

The first thing you must do when you’re struggling to make your IVA payments is tell your IP as soon as possible. If you’re open and honest about your financial situation, they may let you choose a new payment date, temporarily reduce your payments, pay nothing for a short period, or settle your IVA early.

When you miss a payment, your IP should send you a ‘notice of breach’ asking you to explain why you missed a payment and how you are going to put it right. Most IPs will give you up to a month to respond to a notice of breach and agree on how you’ll make up for missed payments.

If the missed payment was due to a financial emergency, such as a sudden illness or unexpected home or car repair, your IP may agree to give you a temporary payment break as long as you can provide evidence to support your claim. This could include a copy of a bank statement, benefit letter, or receipt for an emergency item.

Can I lower my IVA payments?

If you’re struggling to afford an IVA, you may be able to lower your monthly payments to an amount you can comfortably afford.

For example, if you require a reduction of up to 15%, your IP can lower your monthly payment amount without having to inform your creditors. However, if you require a reduction of 15% or more, your IP must seek permission from all of the creditors involved in your IVA and, even if they agree, they might charge a fee.

When your IVA payments are lowered, your arrangement will likely be extended. So while you can lower your IVA payments, your total repayment amount will remain unchanged and will just be spread over a longer period.


If you’re considering an IVA, you may be wondering: How much does an IVA leave you to live on? The answer to this question differs from person to person and depends on a range of factors, such as your debt level, income, and affordability.

Put simply, when you enter into an IVA, you’ll be expected to put any disposable income you have towards your arrangement. However, because your IVA payments are based on your income and expenditure, you should always have enough money left over for your essential living costs.

An IVA can help you consolidate your unaffordable debt into smaller monthly payments, but there are other debt solutions available. Always do your research before choosing a debt solution and seek free debt advice from debt management companies or charities to ensure you’ve made the right decision for your financial situation.

Key Takeaways

Your IVA payments will be based on your income and expenditure so you should always be able to afford your monthly repayments
There are several IVA costs involved but they will be included as part of your monthly payments
You'll be expected to stick to certain spending restrictions in an IVA, such as an IVA budget, to ensure your arrangement is a success
You can only keep an extra 10% on top of your monthly income before you'll be expected to pay 50% of it towards your IVA
If you're struggling to afford your IVA, you can ask your IP to reduce your payments by up to 15% without informing your creditors
Maxine McCreadie

Maxine McCreadie

Author/Debt Expert

Maxine McCreadie, prominent personal finance writer featured in Vogue and Yahoo News, delivers practical guidance, simplifying money management and championing financial literacy.

How we reviewed this article:


Our debt experts continually monitor the personal finance and debt industry, and we update our articles when new information becomes available.

Current Version

October 17 2023

Written by
Maxine McCreadie

Edited by
Ben McCormack

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