An IVA can be an effective debt solution for people with unmanageable levels of debt that they don’t think they’ll ever be able to repay. By enabling you to pay only as much as you can afford each month, an IVA can help to ensure that all day-to-day living costs are taken care of each month.
Before you can enter into an IVA, you’ll usually need to demonstrate a) that your debts are unaffordable, and b) that you can commit to regular monthly payments. In almost all cases, this will require you to have a regular income.
However, it’s impossible to predict the future accurately – and if you lose your job or otherwise experience a fall in income, it’s likely that you won’t be able to maintain your IVA payments at the agreed level. This situation can be serious, as it can breach the terms of your IVA, and as such it’s important that you contact your Insolvency Practitioner (IP) immediately to discuss your options.
What will happen with my IVA if I’ve lost my job?
Most IVAs will have some kind of contingency to allow for a couple of payment holidays – although this will only help with a temporary change to your finances. However, it may be written into the terms of your IVA that you can suspend your payments for up to six months if you become unemployed, and this will hopefully give you enough time to find alternative employment and resume your agreed repayments.
If this happens, your IVA will continue from when you made your last payment, and the time you have missed will be added onto the end of your IVA. If your IVA doesn’t allow for this payment break, you will need to talk to your IP about the possibility of varying the terms of your agreement.
If your situation doesn’t improve in this time, or looks like it may be a longer-term problem, then your IVA could fail and you will need to find an alternative debt solution. In this case, bankruptcy may be a better option, but it’s important to talk through your circumstances with your IP or an independent debt adviser to establish which approach is right for you.
You may find some useful information on IVAs on the Insolvency Service website here.
Tags: Debt, insolvency, IVA
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