www.iva.co.uk

I have an IVA at the moment, my payments are £255 for 20 months & then they go up to £535. I have £28,000 worth of debt & will be repaying £26,500 - is this wright as i thought an IVA was designed to reduce your debt with easy to manage payments?

An IVA is designed to allow you to pay back as much as you can afford withut getting further into debt.

Is there a specific reason your payments will be increasing?

Remember, some of what you are paying is fees for the supervisor and such like

If that is what your IVA stated, and you agreed to those payments, then it is right - however I would have hesitated to suggest this option to you given that you could have paid your debts back in full over a slightly longer period if creditors had agreed to freeze interest.

Melanie hits the nail on the head here in her reference to interest. If the creditors were prepared to freeze interest (for 5.5 years) in an informal scheme then there is little benefit to you in an IVA, and the IPs fees are simply a tier of cost. However, many creditors do look at that aspect of it and won't think twice about rejecting your IVA if they don't think it's in their interests.

Another way of looking at it is to recognise that, if you had not had the interest freeze how much you would have to pay each month to clear the debt over 5 years.

Ian

An IVA should always be compared with an informal plan and if creditors were willing to freeze interest then an informal plan may have been your best option. However, if they were unwilling to do this an IVA will ensure that your debt is cleared after a finite and manageable time (usually 5 years).