IVA stands for Individual Voluntary Arrangement and is a debt solution for people in England and Wales.
These are extremely popular debt solutions because they allow heavily indebted people to consolidate their debts in one place and pay a single, manageable, monthly sum towards them.
The best part is a large portion of the debt is wiped at the end of an IVA – up to 90% of debt in some cases.
IVA calculators are tools that people use to visualise their IVA and better understand how it will affect them. In this article, we explore what an IVA calculator does and the benefits of using one.
What is an IVA calculator and what does it do?
IVA calculators are helpful tools that financial advisors and money-saving experts provide to help people understand what their IVA would look like.
Calculators inform them how much they would be repaid on a monthly basis and how much debt might be written off at the end of the agreement.
They ask users a series of questions based on their financial situation and then email them detailed advice about an IVA, including what an IVA would look like for them.
If a person was paying approximately £900 a month towards debts, this might be reduced to approximately £200 with an IVA.
Benefits of an IVA
For people who qualify for this statutory debt solution, the benefits can be substantial. Here are some of the main benefits:
Lower outgoings: IVAs can lower your monthly outgoings because instead of paying large monthly sums, plus interest, to creditors, you can pay a single, manageable monthly payment. IVAs allow you to spread your debts over many years and at the end of the arrangement, a large portion of the debt is written off.
Consolidate debts: It can do wonders for your peace of mind to know that all of your debts are being systematically dealt with and that they are all in one place. This means that you can stop worrying about who you owe what to, and instead, you can simply set up a direct debit and forget about the debt.
Freeze interest rates: One major benefit of an IVA is the fact that your creditors will freeze your interest rates as soon as your IVA begins. As long as you manage your IVA properly, these interest rates will remain frozen so that your debt only decreases and never increases.
Stop letters and phone calls: Receiving constant messages from debt collection agencies and creditors can have a terrible impact on the quality of people’s lives. Signing up for an IVA means all letters and phone calls will cease because your creditors will see that you are proactively dealing with your debt.
Get up to 90% of debt written off: This is beneficial for obvious reasons. The main draw of IVAs is the fact that you can get a tremendous portion of your debt entirely scrapped.
If you would like some help getting out of debt, or if you would like to inquire about IVAs, feel free to reach out to us.