During the IVA

IVA monthly payments - Changes to Your Circumstances

Your advisor will look at your monthly expenditure realistically when calculating the amount of your monthly IVA payments. He will make provision for you to have enough money to live on as, if you were to make dramatic cutbacks in your normal spending, it is unlikely that you would be able to maintain such a frugal lifestyle for the entire period of the IVA.

During your IVA, the IP will regularly review your circumstances and ability to maintain your monthly payments. These reviews are normally conducted every six months. If during these reviews, your IP agrees that your circumstances have not changed, you will continue to make your monthly IVA payments at their current level. If, however, your circumstances have changed for the better and your income has increased, with the result that you have additional surplus income, you may be asked to increase your monthly payments accordingly.

If, on the other hand, your circumstances change for the worse and you cannot maintain the agreed payments, the IP can ask your creditors if they will agree to a variation of the terms of your proposal, for example reduced monthly payments. If you have maintained your payments up to this point, your creditors may be in favour of accepting the proposed variation.

If there is an emergency and you are faced with an unexpected expense which causes you to miss a monthly payment, unless some provision can be made for this eventuality, this could cause your IVA to fail, resulting in your bankruptcy.

Therefore it is really important that you are honest and realistic when assessing your finances in the initial stages and keep your supervisor advised of possible changes in your circumstances as soon as you become aware of these.

An IVA is a reasonably flexible arrangement and allowances can be made for unforeseen emergencies. If you are suddenly made redundant for example, the first thing you should do would be to notify your Insolvency Practitioner.

It is likely that your IP will then call a meeting of your creditors to seek the approval of your creditors for a “payment holiday” to allow you sufficient time to get back on your feet before resuming your customary IVA payments. It is likely that the months that you miss will be added on to the end of your IVA. If a more serious emergency occurs, further negotiations may be required. However, if there is no good reason for you not to maintain your monthly payments, your IVA will fail leading to your bankruptcy.

If you are unable to re-start your payments at all, it is likely that the IVA will fail. Your creditors will then be at liberty to take other action against you and you will need to make alternative arrangements.

Next >> IVA Advantages and Disadvantages

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