Published in Debt Advice Features on Friday, March 30 2007

Your payments are almost entirely based on a detailed budget in the Individual Voluntary Arrangement? You may have seen advertisements that claim to write of 75% of your debts, but this is wrong as you have to pay back as much as you can and that is dependant on this detailed budget.

The budget will take everything into account incoming and outgoing, for example your income does include tax credits and child benefit, maintenance payments etc. Your expenditure will include items such as rent or mortgage payments, council tax, utilities, food, car and travel expenses, child expenses (nursery costs, maintenance payments..) and will even take into account if you need glasses or prescriptions and will include clothing and haircuts. No one is looking to financially cripple you, and the budget should be fair, but it will be recognised if figures are exaggerated and proof is often required.

Remember quite often the more you pay into your Individual Voluntary Arrangement the more likely the creditors are to accept it. They can reject it if they think any figures are too high or even too low. If they believe you cannot manage your contributions it means the Individual Voluntary Arrangement could fail say two years in and then they will get no money back. They may send it back to the Insolvency Practitioner asking for modifications to made and then you would need to decide if you could meet these.