If you’re considering an IVA as a way to manage your debt, here’s why the start of the year could be the best time to begin.
What Does an IVA Involve?
An Individual Voluntary Arrangement (IVA) is a formal agreement to manage debt with the assistance of an Insolvency Practitioner. Typically lasting five or six years, it allows you to make affordable monthly payments towards your debt.
During the IVA, interest and charges on your debts are frozen, and once the agreement ends, any remaining debt is written off.
If you’re struggling with repayments but have disposable income to contribute, an IVA could be the solution you need to regain control of your finances.
While an IVA can be started at any point, January is an especially advantageous time to do so:
Start Fresh in the New Year
The new year represents a chance to reset and take control of your finances. After reflecting on the challenges of the previous year, January often inspires people to set financial goals. If rising interest and penalties have made your debts overwhelming, this could be the perfect moment to act.
By starting an IVA in January, you can use this motivation to begin addressing your financial difficulties and take the first step towards a more secure future.
Prevent Further Charges
December can be financially demanding. Winter energy bills and Christmas shopping often lead to overspending, leaving many people with increased debt in January. The added strain of interest and penalty charges can make repayment even harder.
Choosing to enter an IVA in January freezes your debts, stopping further charges from accruing. This gives you the breathing space to focus on repaying your existing balances and prevents creditors from pursuing legal action.
Account for New Costs
With January often bringing price increases due to inflation, household expenses like utility bills are likely to rise. Unfortunately, income doesn’t always increase at the same pace, which can stretch your finances further.
Starting an IVA in January allows you to calculate your budget based on these updated costs. If you begin earlier, your disposable income might be overestimated, leaving you with less flexibility to handle real expenses.
Aligned Annual Reviews
Your IVA will be reviewed every year to ensure your payment plan remains fair and achievable. If expenses rise – as they often do in January – or if your income changes, your Insolvency Practitioner will adjust your payments accordingly.
Starting an IVA in January ensures your reviews take place at the start of the year, a natural time to evaluate your budget, spending habits, and potential savings.
Easier to Track Progress
An IVA is a long-term commitment lasting five or six years, during which your financial activities will be impacted.
Beginning your IVA in January creates a straightforward timeline, starting and ending in the same month, which makes it easier to track your progress and plan for life after the agreement.
Interested in taking control of your debt? Contact the team at My Debt Plan on 0161 8260 585 or visit our website to learn more.