Debt Advice Apply Easily Online Today !

Can I make token IVA payments ?

Making token payments before beginning an IVA

If you have decided that you wish to take out an IVA then you will often be advised by your Insolvency Practitioner to start making token payments which are just a small payment, of as much as you can afford, that you make to each of your creditors.

Why should I make token payments?

It is likely that you are going to be entering into an IVA because you cannot pay your creditors and therefore have no disposable income as such. For this reason it is not uncommon to offer a token payment as a goodwill gesture to the creditors to show you are willing to repay your debts. You will have to remember that in most cases your creditors are writing off up to 75% of the debt you owe them. In most cases, your creditors will have requested a small payment though. A token payment need not be a large amount, but can be something as small as even £1 a month. 

Another reason for making these small payments is that it can help keep your creditors quiet for a short amount of time and a token payment is deemed to be better than nothing.

How much should I pay?

When deciding how much you can pay as your token payment you should work out how much money you can comfortably afford each month without furthering your debt. Whatever this amount is, you will then need to divide it up between the creditors you have depending upon how much you owe each i.e. pro rata. This means that you should give the most to the creditor that you owe the most money to. It is a good idea to continue these token payments until your IVA has been fully approved. It will also speed up the process.

How do I go about making these payments?

Before entering into an IVA it is required that you set up a new basic bank account and you will then be able to use this to make the payments to your creditors.

If at any point you are unsure of how much to pay or how to go about it then make sure that you contact a professional for help and advice.