IVA Expenditure Allowances explained

In an IVA, it’s important to determine a fixed amount that you can afford to repay to your creditors every month.
This amount is calculated on the basis of your monthly income and your monthly expense budget. This budget is known as the IVA Expenditure Allowance.

The debtor needs to make a list of all living expenses that can be included in the IVA Expenditure Allowance.
This allowance is then deducted from the debtor’s income to determine what amount he can afford to pay to his creditors each month.

However, the creditors could review the IVA Expenditure Allowances presented by the debtor and could reject the IVA proposal if they find any of the included expenses as unreasonable.
Hence, it’s important that the debtor workout on his monthly budget and should include all the expenses in a careful manner.

While making the list, the debtors can keep in mind the following points:

a) Fixed monthly expenses
There could be several types of living expenditures that would be of a fixed nature such as your house rent or mortgage payments, insurance premiums, utility bills and Council Taxes.

Such fixed expenses are usually included in your expenditure budget without any hassles, as you cannot manipulate with these expenses.

b) Variable monthly expenses
The creditors will carefully review those expenses that are of variable nature such as your fuel cost and housekeeping expenses.

The debtor needs to give a thoughtful consideration on those variable expenses before including them in their living expenditure allowances.
Moreover, one needs to include a reasonable amount for expenses related to foods, clothing, children’s school fees etc.

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