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What are the allowable living expenses in an IVA?

When you are considering an IVA, there are two main questions that might be on your mind.

“Will my monthly IVA payment be affordable?”

“Will I have enough money to live on each month?”

The answer to these two questions is essentially YES! You should not apply for an IVA unless it is affordable and sustainable for the duration of the IVA.

If you feel the answer is NO, then an IVA is not the best course of action for you, as it will be likely to fail at some point during its term, or could even be rejected by your creditors from the outset. Your Debt Advisor or IVA Provider should help you work out the best course of action for dealing with your debts.

Ultimately it will be up to you to make the final decision on an IVA, but your Insolvency Provider will carry out the correct analysis and acquire the relevant documentation to determine if an IVA will be a success for both you and your creditors.

So how does an IVA provider ensure that your living expenses and IVA payment will be right for you and acceptable for your creditors?

Review your Current Situation

Your Debt Advisor should firstly carry out a Fact Find of your current situation, to help determine your options for addressing the debts. This will involve gathering information on your:

  • Marital status
  • Living situation
  • Employment status
  • Household income
  • Household outgoings
  • Types of debt involved
  • Current circumstances
  • Amount of debts in total
  • Household and family members

Your Debt advisor will consider all of these things when working out the right debt solution for you.

IVA Living Expenses

Your Debt Advisor or Insolvency Practitioner will use Industry recommended guidelines when reviewing your Household Income and Outgoings for an IVA or any debt solution.

The above factors, along with these guidelines, will help determine a budget for living that is reasonable, and monthly payments that are affordable and sustainable throughout the lifespan of your IVA.

Living Expenses in an IVA

The recommended guidelines are broken down into several main categories and subcategories, which helps to ensure that no expenses are missed when reviewing your monthly household outgoings. These are outlined below.

Fixed costs

These are essential set costs that have a fixed price that is unique and specific to your household. The main categories are:

Home and contents
This category covers expenses such as Rent, Mortgage, TV License and any other expenses relating to your home.

This covers all of your energy provider bills, such as gas, electricity and Oil.

This covers expenses such as Water Supply and Water Waste.

Care and Health
Care & Health costs would cover needs such as childcare, prescriptions, opticians etc…

Transport and Travel
This would cover expenses for anything transport related, whether that’s public transport or  private and the costs associated with it; repair costs, Insurance, HP, Road tax etc…

School costs
Expenses for this category include any school related costs, clubs, uniforms, fees etc…

Pensions and insurances
This expense allows for costs for any Pensions, Life Insurance, Health Insurance etc…

Professional costs
Expenses for Professional costs include Professional Courses, Professional Fees, Union fees etc…

Other essential costs
The guidelines allow for certain other costs that might be essential to you or your household that need deducted from your income, such as credit commitments from a partner.

Flexible costs

Flexible costs are costs that have a suggested minimum and maximum range which vary according to your household. Generally creditors would expect to see you fall between the range for these types of category, but there may be some extra allowances, depending on your circumstances. The categories for this are:

Communication and Leisure
Communication and Leisure covers a range of costs that contribute to your physical and mental wellbeing. These types of costs are important and should not be overlooked when it comes to addressing your debts. You are entitled to a reasonable standard of living, even when it comes to repaying debts. Some examples of items under this category would include Internet, TV package, Phone costs, Hobbies, Gifts and Pocket money to name a few.

Food and housekeeping
This is another important category which includes all costs relating to your household. The expenses in this category will vary depending on the type of household you live in. For example, a single person might have very different food and housekeeping costs when compared to a single parent with 3 young children, who might pay for school meals, nappies and baby items.

Personal costs include expenses such as clothes, hairdressing and toiletries, which are also important expenses.


When all of your information has been reviewed according to the guidelines, your Debt Advisor or Insolvency Practitioner will explain the options that are suitable for your situation. There are a range of Debt Solutions that might be suitable, depending on your circumstances. These might include an IVA, Debt Management Plan, DRO, Debt Consolidation or Bankruptcy. It will be up to you to review the information and choose a solution that you feel works for you.

Verification of information

When you have decided on a Solution, such as an IVA, your advisor will need to verify your information with “Proof Documents” before drafting your IVA proposal. They might ask for recent payslips or bank statements to make sure that the costs you have explained are accurate and that nothing has been missed.

Your ‘Proof documents’ will also show your creditors what you can truly afford in your IVA. The industry guidelines are also widely recognised by creditors, so when your information is presented to them, along with your supporting documentation, that verifies your affordability, it will help in their decision making on whether to vote in favour or against your IVA proposal.

Want more information?

To find out more about the allowable living expenses in an IVA, contact us on 0800 043 3328 or click here to fill in the form on this page and one of our advisors will get in touch.