How much does an IVA leave you to live on?

Your IVA payment is not a percentage of your debt or your income. It is the gap between what your household brings in and what it reasonably needs to spend. That makes the budget the most important document in your IVA. If it is realistic, the IVA has a fair chance of lasting five or six years. If it is too tight, it is likely to fail, and a failed IVA can leave you facing the full debts again, with frozen interest and charges added back.

How is your IVA budget worked out?

The IVA Protocol 2025, the standard framework for consumer IVAs since 1 July 2025, says the insolvency practitioner preparing your proposal should draft a budget with you “using the Standard Financial Statement” (SFS). It should cover the income and spending of the whole household where appropriate. Your payment must be sustainable for the whole term and should not cause hardship. You can read the full text in the IVA Protocol 2025 on GOV.UK.

The SFS is run by the Money and Pensions Service and is used across debt advice, so it is the same format a debt adviser would use. It includes spending guidelines for everyday flexible costs, set for different household sizes and updated each April. The 2026/27 guidelines are in force now.

The practitioner should also look ahead for changes likely during the IVA, such as a fixed-rate mortgage ending or child benefit stopping when a child turns 18.

What counts as essential spending?

Spending above the guidelines is not automatically refused. The Insolvency Service has told practitioners that anything which may look excessive should be “thoroughly explained in the proposal and supported by evidence”. A higher food bill because of a medical diet, or higher travel costs because you work shifts with no public transport, are the kind of thing to explain.

What drops out of your budget is the payments you were making to the creditors in your IVA, because the IVA payment replaces them. Payments on debts that cannot be included, such as child support arrears or magistrates’ court fines, stay in.

A worked example

This is a hypothetical example with round numbers. It does not use real SFS figures.

Sam is a single parent with one child. Sam’s take-home pay plus child benefit comes to £2,100 a month. Sam’s essential costs are:

That leaves £250 a month, which becomes the IVA payment. Over 60 months Sam would pay in £15,000. The practitioner’s fees come out of that money, and the key facts document for protocol IVAs warns that your first payments usually cover more of the fee than your debts. See how much an IVA costs.

What happens at your yearly review?

Once a year, on the anniversary of your IVA, your supervisor reviews your income and spending. The Protocol’s standard terms call this “the primary tool” for showing creditors your IVA can be sustained.

• If your disposable income has gone up, your payment rises by 50% of the increase, starting one month after the review. For example, if Sam’s spare income rose from £250 to £310, the payment would go up by £30, to £280.
• If your disposable income has gone down, your supervisor can reduce your payment. They can agree reductions of no more than 20% in total without asking creditors. A bigger cut needs creditors to vote on a change to the IVA.
• If you do not take part in the review, the IVA may be ended.

What if your income changes between reviews?

• Overtime, bonus or commission: if extra income takes you more than 10% above your normal take-home pay, you must tell your supervisor within 14 days, then pay in half of the amount above that 10% within 14 days. For example, with normal take-home pay of £2,000, a £500 bonus is £300 over the £200 threshold, so £150 goes into the IVA and you keep £350.
• Redundancy: tell your supervisor within 14 days of being given notice. You can usually keep redundancy pay equal to 6 months’ take-home pay. Anything above that goes into the IVA.
• A temporary drop in income: your supervisor can agree payment breaks of no more than 9 months (39 weeks) in total over the IVA. The IVA is then extended by no more than 12 months to make up the missed payments, unless you make up the shortfall another way.
• Windfalls and inheritances over £500: see pay rises, bonuses and windfalls.

These are the Protocol 2025 terms. If your IVA started before 1 July 2025, check your own proposal, because some older terms differ.

What do people get wrong about IVA budgets?

• “There is a set amount per person.” There is not. The SFS guidelines depend on household size, and your housing, travel and care costs are your own.
• “Every pay rise goes to creditors.” Only half of any increase in disposable income is added to your payment.
• “I will have nothing for myself.” The spending guidelines include an amount for phone and leisure. It is modest, and holidays or big purchases have to fit within your budget.
• “I can borrow to cover a gap.” Credit of more than £500 needs your supervisor’s written approval, and borrowing to cover an emergency usually makes things worse. Ask your supervisor about a payment break or a reduction instead.
• “The IP will sort the budget out.” The practitioner drafts it with you, but you know your real spending. Use your own bank statements, not guesses.

If an IVA is going to leave you with too little to live on, it may not be the right route. IVA or debt management plan? compares it with a more flexible option.

What to do next

1. Go through three months of bank statements and list what your household really spends. Add yearly costs, such as car servicing, school uniforms and Christmas, as a monthly amount.
2. Compare that with the budget in any proposal or key facts document you are given, and question anything that looks too low.
3. If you are already in an IVA and the budget is not working, contact your supervisor now, before you miss a payment.
4. Get a second opinion that costs you nothing. Free, impartial debt advice is available from MoneyHelper, StepChange, Citizens Advice and National Debtline: see where to get free debt advice.

For more on day-to-day life in an IVA, see life in an IVA. If you use our checker, we may pass your details to a licensed insolvency practitioner or debt adviser.