Servicing The Repayments
IVAs are going to last for at least five years, so it is almost inevitable there will be one or two more financially challenging times along the way. One way to describe Individual voluntary arrangements is as a form of contract drawn up between you and your creditors. You agree to repay a fixed amount every month (or sometimes another fixed time period). This means should you face financial challenges along the way, you will need to liaise carefully with the professional licensed Insolvency Practitioner (IP) who is managing this contract with you.
• If you miss 2 or 3 missed payments without providing any acceptable explanation, it could well mean that your IP has to issue a Notice of Breach. These notices are a key factor for IVAs failing.
• If you know you are likely to miss or have already missed making a payment but have a genuine reason for doing so, do immediately get in touch with your IP and explain. It is sometimes possible to increase the amount you pay during the next repayments amounts and thereby ‘catch up’.
• Sometimes it is possible for your IP to arrange a variation meeting to create changes to the agreed amounts that you would subsequently pay. In some cases, it may be possible to arrange a short extension to the IVA instead.
No matter what the situation, the key point to stress if that you must get in touch with your IP as soon as possible in order to explain the situation and gain their professional input. It has to be said, the best advice is to never ever simply ignore the situation – this is in fact a chief reason behind why some individual voluntary arrangements fail altogether.
Always Keep Your IP Informed Of Changing Circumstances
You need to keep in close contact with your IP and let them low as soon as possible if your financial situation changes in any way. This includes, for example:
• Any times when your income increases, for example, if the amount is over 10% of your normal take home pay, any pay rises, overtime, bonuses, sales or other commission all affect IVAs. You must therefore inform your IP within 14 days. Sometimes it is necessary to fill out a new income and expenditure sheet, for example, if you take a new job.
• Any times when your income reduces, for example, in cases where ill-health is a factor. You need to let your IP know as soon as possible, as your ability to meet repayments could of course be compromised. In some circumstances, there is some leeway to create slightly reduced payments.
• If you are made redundant, it is vital you inform your IP within 14 days and let them know the exact amount of any redundancy payment due to you. You should continue to make repayments whenever you can in the meantime. If at any point, it’s not going to be possible to meet a repayment, you need to have a discussion as soon as you can with your IP. Again, in some cases there is some leeway to slightly reduce agreed repayment amounts. When you gain a new job, you must also inform your IP as soon as possible.
What To Do If You Struggle To Meet Payments
• If you find sometimes you’re genuinely struggling to meet repayments due, you must never simply allow them to lapse. Instead, contact your IP to discuss the situation with them. It does depend on the circumstances, but there may be options still open to allow you to keep to the terms of individual voluntary arrangements which your IP may be able to negotiate on your behalf.
• It’s important to remember that some IVAs will not allow your IP to call for a variation meeting during the first two years. It’s therefore essential to make sure you’re one hundred percent clear about everything whilst you and your IP are still making the arrangements in the first instance.
From our many year’s experience helping people with serious debts arrange IVAs, we support people with all aspects of arranging and successfully completing an IVA.
