What percentage of your wages creditors can take

Often one of the most functional solutions to large debt problems is an IVA or Individual Voluntary Arrangement. This allows you to bring all of your outstanding debts together in a legally binding government-approvement agreement. The debtor (you or the person who owes the money) makes a monthly payment the IVA fund account over a fixed period of five years. After this time, the remainder of the debt is written off.

The amount repaid each month depends on the agreement that is made at the meeting of creditors. A proposal is put forwards by an Insolvency Practitioner (IP) to the creditors and twenty five percent of the creditors must agree to the terms of the proposal.

The amount of money repaid each month, is usually between £150 and £300, or whatever is firstly affordable by you and secondly acceptable by the creditors. Some will want a percentage of your wages, but this will be worked out individually with your IP.

If your wages or salary increases, it is essential that you contact your IP once more as the amount will need to be adjusted. The same is true of windfalls or lottery wins, which all must be disclosed to the court and your creditors. It is important to note that your creditors cannot forceably take any money from you.

During an IVA period, no creditor listed in the IVA agreement may take legal action against you for the debts incurred before the IVA was formalised.