I will have to account for every penny I spend IVA Myth
Summary: I will have to account for every penny I spend - This article aims to reassure those considering an IVA (Individual Voluntary Arrangement) that their spending will not be over- scrutinised.
An expenses budget
Fundamental to any IVA, is the income and outgoings analysis. A list of anticipated outgoings from the actual (mortgage or rent, bills etc) to the allowances for food, clothing, social etc will be presented. This budget will have to be agreed by the creditors before an IVA is accepted. High costs will need to be explained e.g. fuel to get to work, childminding. The idea is to make sure that those entering IVA's have enough to live on.
Living within means
When an IVA is accepted, the principle of living within our means is important. Access to further credit is denied, so hard choices may need to be made when it comes to spending. About once a year the IVA will be reviewed and it is likely that the income/outgoings figures will form part of that review. However no one will be asking for a detailed and specific breakdown of all outgoings.
If someone in an IVA is claiming high petrol costs, it is not unreasonable for an IVA supervisor to request some receipts. However the same is unlikely to be needed for food shopping or social activities. The budget, whilst important, is there as a guideline. No one is going to be watching closely over your shoulder to ensure the £34/mth clothing allowance is used each month without fail!
At the annual review it is possible that bank statements will be requested. If these show a pattern of spending that is unaccounted for or raises questions, then the IVA supervisor will require further details. It's not so much an individual entry on a bank statement that will raise concerns (though the purchased of a new BMW may raise an eyebrow!) but any regular spending habits that are unaccounted for in the IVA budget.