Saving in an IVA

Saving in an IVA

Saving during an IVA is allowed. If fact most people will need to save to some extent during the Arrangement. This makes sure there are sufficient funds available to pay for annual expenses such as car servicing when needed.

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Can you Save during an IVA?

There is nothing to stop you saving during an IVA. Once your living expenses budget has been agreed you are in full control of what you do with your agreed spending allowances. You can save as little or as much of these as you want.

In fact, saving during the Arrangement is often a necessity. It is likely that there will be expenditures in your budget which you don’t pay for each month. Good examples of these are the budgets for home or car repairs.

You need to ensure that you save these funds. This way, they are available when those periodic bills and costs do come up.

There is no limit to the amount you are allowed to save during an IVA. Just as long as what you put aside comes from your living expenses budget or from extra earnings you have been allowed to keep. More on this below.

How to save during an IVA

Although saving during an IVA is important, doing so is by no means easy.

Normally, your only option will be to find cost savings from your agreed living expenses. Perhaps you could reduce your monthly energy bills by switching suppliers. Alternatively you might be able to make small cuts to your housekeeping, travel or leisure budgets.

In additional to cutting costs, you might also be able to save if you can earn a little extra each month. If you do overtime or earn a bonus some of this will have to be paid into your IVA. However at least 50% will be yours to save.

The key to saving during your Arrangement is making sure that you physically put the money aside each month.

The best way to do this is open a savings account at your bank. That way you can physically transfer the money you want to save into this account and you will be less tempted to spend it.

If you earn extra by doing overtime or get a bonus, you can’t save all this money. Such additional income must first be declared to your IVA company. 50% will have to be paid into your IVA. You can save the remaining 50%.

Can Savings be used to Settle your IVA early?

After you have been saving for a while it is possible that the amount you have aside will grow to a reasonable sum. In theory you might be able to use the amount you have saved settle your IVA early.

The money you have saved from your agreed expenses budget is yours to keep. You are not obliged to pay it into the Arrangement and your creditors have no claim on it. As such if the sum was large enough it could be offered to settle early.

Having said that it is very unlikely that you will be able to save a sufficient sum during your IVA to make a settlement offer that would be acceptable to your creditors. As such it is normally best to simply hold on to your savings.

What if you are unable to Save and face a Financial Emergency?

It is possible that you will face an unexpected financial crisis during your IVA before you have managed to save enough to cover it. If this happens you may be tempted to try and borrow (perhaps from a Payday lender).

You must not do this. Borrowing more could put your whole Arrangement at risk. It will leave you in a position where you are unable to pay both your agreed monthly payment and the extra you have borrowed.

As such if you find yourself facing a financial emergency you should first speak to your IVA company. Most will allow you a payment holiday. This means you stop paying the Arrangement and instead use the money to cover the emergency.

Do not be tempted to borrow more during an IVA. It will put the Arrangement at risk. If your savings are not sufficient to cover a financial emergency speak to your IVA Company.

34 thoughts on “Saving in an IVA

    Jasber says:

    i am in a iva and it will end in Dec 23, I have never missed a payment. I have £9.000 in savings, The iva people have asked to see my bank stament, What will they do?

      Hi Jasber

      Thank you for your query (below).

      I assume you are doing an annual review with your IVA company and that’s why they have asked to see a bank statement? This is quite normal. Usually your IVA company would do such a review and ask for bank statements every year on the anniversary of the Arrangement start date.

      In terms of the £9000 savings you have, if this is showing on your bank statement, your IVA company is likely to ask you where it came from. If it is money that you have saved since your IVA started from your agreed living expenses budget, there should be no problem. You are allowed to keep these funds.

      The only time there would be a problem is if the money has been saved by doing additional work (for example overtime) that you have not told your IVA company about. Alternatively if you got the money as the result of a windfall (perhaps an inheritance payment or gift). If you got the money under any of these circumstances, then the IVA company would legitimately have a claim on some or all of it.

    Patryk S says:

    Hi im currently on IVA can go on holidays also how much I’m allowed to save from my weekly income

      Hi Patryk

      Yes, you are allowed to go on holiday during an IVA. This can be either in the UK or abroad. You don’t have to tell your IVA company. You can read more about this here: Go on holiday during an IVA

      There is no limit to the amount you can save during an IVA. Just as long as the money you are putting aside comes from your agreed living expenses budget or the amount you can keep from any extra earnings.

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