Problems with IVAs can take many forms but, in our experience, revolve mainly around payment issues.
When you are trying to live within a tight budget it doesn’t take much of a change for problems to develop.
So, what happens if you are in an IVA and you suffer a problem, will the IVA fail?
Well, you’ll be pleased to know that there are several different option available, designed to provide relief when your budget cannot cope.
The most important thing to remember is to discuss your budget problems with the insolvency practitioner, for without their help, your problems will never be solved.
The insolvency practitioner will try to establish what action is most appropriate, once they assessed the problems you are facing.
It is possible to arrange a payment break of up to 6 months.
This can be the perfect solution for people who suffer a short term income loss, such as a block on overtime, sick leave or maternity leave to name a few. The insolvency practitioner simply stops payments into the IVA, then adds the missed payments to the end of the IVA’s term, therefore not changing the over all dividend into the IVA.
If a short term payment break is not the answer, it is also possible to seek a reduction in the size of the monthly payments.
The insolvency practitioner has the authority to make a 15% reduction to the payment without the need advise the creditors.
If this isn’t a sufficient enough reduction, the insolvency practitioner can call a ‘variation meeting’. This is similar to the original creditors meeting, where each creditors is invited to cast a vote on the proposal to reduce the IVA payments in line with the latest financial statement of the IVA candidate.
If sufficient enough creditors vote in favour of the variation, it becomes legally binding on all creditors even if they voted against it and overwrites the original arrangement.
So, if you are having Problems with an IVA, contact your IP and seek their help in getting things back on track.
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