As you will know, if you have agreed to the terms of an Individual Voluntary Arrangement (IVA), you have agreed to pay your creditors regular amounts at regular periods.
But can you take a payment break from your IVA payments if your circumstances change?
Can you take a payment break if you lose your job? Can you take a payment break if your partner leaves and you are no longer able to maintain payments? Or what happens if something else happens to stop you paying each month?
The term of an IVA is normally 5 years which is, as you know, rather a long time to have to hope your circumstances won’t change for the worse, even if the change is beyond your control.
Creditors and Insolvency Practitioners realise this too, and in most circumstances they do have the ability to make exceptions to help a client in IVA with a short break in their payments should their be a significant reason to do so.
Most IVA proposals only allow for two missed payments over the length of the IVA as a standard condition of the IVA. This is primarily included as a default position to take care of those odd occasions where someone in an IVA just refuses to continue paying. After 2 missed payments the Insolvency Practitioner can notify creditors that the arrangement has failed, and ask for their instruction. The credit actions could include petitioning for the debtor’s bankruptcy, though this is not always the case.
But it is in the interest of all parties involved in the IVA to make sure the IVA has the best chance of success as is possible, so the Insolvency Practitioner does have some discretion available over what actions should be taken in the event of a temporary change in circumstances.
Some examples of temporary changes in circumstances could include redundancy or illness, or could be something like a domestic emergency requiring immediate financial expenditure such as a boiler failing or car engine meltdown.
Anyway, assuming the payment problem is temporary, then there are two options to consider.
- To extend the length of the IVA by the number of missed payments.
- To arrange for the arrears to be paid off as overpayments into the IVA.
In both options it is imperative that all parties agree to the amendment and, that once agreed, the new arrangement is adhered to.
In all circumstances, it is by far the better course of action to contact your Insolvency Practitioner as soon as you realise there will be a problem making your IVA payments. By keeping the insolvency Practitioner informed you increase the chances of reaching a successful outcome and keeping your IVA on track.
If you are having difficulties paying your IVA and you would like to discuss your options call 0800 088 7503, or download one of our free IVA guides which are designed to help you find a solution.
You’ll find the link to the IVA guides on the top navigation bar and the left hand side of each page of the site.
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