Minimum Payment for an IVA

29/06/2023
Minimum Payment for an IVA

Your IVA payment will always be based on what you can reasonably afford. That said, there is usually a minimum payment of at least £100 a month.

Included in this article:

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What is the minimum acceptable payment for an IVA?

The minimum payment for an IVA has fallen in the last few years. If you present an IVA today, you could offer a payment of as little as £100 a month towards your debts.

Creditors might accept an amount which is lower than this if they know you will increase your payment later on. For example, if you have a car finance deal which finishes in 2 years, you will be expected to add the money which is then freed up to your ongoing IVA payment. 

Some IVA companies may agree to start an IVA for as little as £75-£85/mth. However, be very wary. At this level the Arrangement is simply not economic for them to run. 

They will almost certainly be constantly looking for ways to increase your payment and you should expect it to go up during the agreement.

Struggling to get your head round all of this? We can help. Call us (0800 011 4712) or complete the form at the bottom of this page. The advice is free and confidential.

How much will your monthly IVA payments be?

It is really important to understand that your payment will not necessarily be £100/mth. It will be based on the amount you can afford.

This amount is calculated by subtracting all your living expenses from your total income. The amount remaining is called your disposable income (or surplus income). You have to pay 100% of your disposable income into your IVA each month.

This means that the payment you make into your IVA could differ from someone else who owes exactly the same amount of money. Some people pay a larger payment each month because it is affordable for them. Others pay less.

Calculating your disposable income correctly is really important as it forms the basis of your IVA payment.  Get the DI calculation wrong and you might not be able to afford your payments and your IVA could fail.

Your priority should be that you can afford all of your normal living expenses. This will prevent you getting into further debt.

It is entirely possible for two people with the same amount of debt to be paying different amounts into their IVAs. 

Will your payment change during the Arrangement?

In the spirit of paying as much as you can afford, you need to understand your IVA payments are not fixed. Creditors will expect you to pay more if you can afford more.

This usually arises when your income increases or you get overtime and bonuses. This is usually reviewed each year at your annual review when your budget is checked by your IVA supervisor. However, if you know you have an increase or extra money, do not wait for the review.

Always check with your IP whether you need to save extra money during the year. If you have not paid the extra amounts during the year you will be expected to at the annual review. Where you have not saved the money you risk your creditors failing your IVA.

If your income falls or your living expenses increase, it is technically possible to reduce the amount you pay into your IVA. However, if your payment is already no higher than the minimum £100/mth, your IVA company may not be able to reduce this any further. 

Want to start an IVA. Call us (0800 011 4712) or complete the form below. The advice is free and confidential.

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8 thoughts on “Minimum Payment for an IVA”

    Dean says:
    04/12/2019 at 10:40

    Hello . I’ve been currently seeking advise for an iva. Firstly I was told it will be £152 per month but one of my creditors apparently required my payments to be £230 per month . Is this something that happens ? Plus my iva is not a fixed rate is this also normal ?
    Many thanks

    Reply
      James Falla says:
      04/12/2019 at 11:06

      Hi Dean

      Unfortunately this happens all too often. Many IVA companies sell you the idea of an IVA on a lower payment but then increase it during the process when they know it is more difficult for you to back out. If you are concerned about this and want more advice before going ahead please don’t hesitate to contact us (0800 011 4712).

      In terms of the IVA payment not being fixed this is 100% true. Your payments can increase during the Arrangement if your income goes up or living expenses go down.

      Reply
    Davie says:
    24/06/2020 at 12:55

    I currently have an IVA and am undergoing a review and my surplus money has been calculated at circa £200 (which hasn’t change from the last review). My limited understanding is my IVA would have half (£100), however they have stated my Surplus is £200 – £100 which I’m already paying leaving £100, therefore they require half of that, meaning my new repayment would be £150 leaving with me just £50 and that doesn’t sound right to me.

    Many Thanks in advance for any advise you can provide.

    Reply
      James Falla says:
      24/06/2020 at 13:12

      Hi Davie

      I am not 100% clear on your situation but I think there are two possible scenarios:

      1. You were originally paying £200/mth into your IVA. If that was the case and after your annual review your surplus income is still £200 then your payments will remain the same (£200/mth).

      2. Your original payments were £100/mth. But now due to an increase in income your surplus income has increased to £200 (ie an increase of £100/mth). In this scenario the standard terms of an IVA would state that you keep 50% of the increase in surplus and 50% has to be paid into your IVA. Your payments would therefore increase from £100/mth to £150/mth and you would keep the remaining £50. As such what your IVA company is saying would be correct.

      Reply
    Christine says:
    16/03/2021 at 15:42

    Hello. Is Personal Independence Allowance taken into consideration as income for an IVA?
    Thank you.

    Reply
      James Falla says:
      16/03/2021 at 15:50

      Hi Christine

      Different IVA companies take a different view on this. Personally, I believe PIP and DLA payments should not be included in the calculation of a household surplus income. As a general rule it is not included in the calculation if someone were to go bankrupt and IPs normally follow these precedents. However, I am aware of some IVA companies who insist it should be taken into account.

      With clients I work with, I would only take this type of income into account if it were required to make up a sufficient surplus to make the IVA viable (normally a minimum of £100/mth) and there was no better alternative debt solution available or desirable.

      Reply
    ReadI says:
    17/02/2022 at 11:24

    Hi, I’m trying to find out what happens if someone uses IVA to write off a debt. If the person doesn’t pay the full money of the debt, does the debtor get the full amount?

    Reply
      James Falla says:
      17/02/2022 at 11:31

      Dear Readi

      An IVA is an agreement with creditors to settle debt. Usually, the total amount paid back to all creditors in the Arrangement is less than the outstanding amount they are owed. Once the IVA is completed, any debt that creditors have not been repaid has to be written off. It can’t be recovered in any other way.

      You can read more about the amount of debt that creditors may have to write off as the result of an IVA here: How much debt is written off in an IVA

      Reply

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