The amount of debt written off in an IVA is not fixed. It depends on how many you can afford to pay into the Arrangement.
There is no variable amount of debt that can be written off if in an IVA. You may have read or heard that the solution will mean you write off 80% or more. However this is not always the case.
Once the Arrangement starts you usually make monthly payments towards your debts based on income. The payments will normally last for 5-6 years. At the last part of this time any debt that remains unpaid is written off.
As such the amount writes off depends entirely on how much you were able to pay during the IVA. If you could only afford to pay a small percentage of your debt back a bigger percentage will be writes off. If you were able to pay more a lesser amount is written off.
The debt written off in an IVA is not fixed. It depends on how much you pay into the collection. 2 people with the same amount of debt may write off different amounts.
To get a plan of how much debt you will write off in your IVA you first need to estimate how much you will pay into it. To do this you require to multiply your monthly payment with the expected length of the Arrangement.
Most monthly payment IVAs last for five six years. If you trust you will be paying for Five years then you have to multiply your monthly payment by 60 months. If it is Six years then multiply the amount by Seventy Two months.
Then you require taking away the total amount you will pay from the total debt included in the agreement. The amount left is what you guess can will be written off. You can then calculate this as a percentage of the full amount debt owed.
For example : If you’re monthly payments are £200 & your IVA lasts 5 years you will pay £12,000. If your complete debt is £22,000 you will pay back 55% and write off 45%
Once it has started the amount of debt written off by an IVA is not permanent. For the reason that it is possible for the amount you pay into the Arrangement to change.
If your income improves during your IVA the result may be that your disposable income will go up. As a result you might have to begin paying more into the agreement. If this happen then the amount of debt you write off will reduce.
In the similar way if your circumstances become worse you may be able to reduce your payments. In this condition the number of payments you make may be extended but you could end up paying less into the IVA overall. As a result the percentage of debt write off will increase.
If your income increases or you get a windfall for the duration of your IVA the amount you pay into it will increase. As a result the amount of debt writes off will fall.
It is possible that your fortunes could improve to such an extent that you are able to repay all of the unique debt you owed during your IVA. This might happen if you receive a great windfall such as an inheritance or lottery win.
If this were to happen the terms & conditions of your agreement will state that the money received has to be paid to your IVA Company. They will then use the funds to pay back 100% of your original debt (less any payments you have already made). They can also pay their amount and interest on the debt at 8% pa from the start date.
After this the Arrangement will come to an close. However because all of your original debt has been paid in complete you will have written off nothing.
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