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What happens to overtime during an IVA?

What happens to overtime during an IVA?

What happens to overtime during an IVA?

If you earn overtime during an IVA you will have to pay some of this into the Arrangement. Generally speaking it will not mean that the Arrangement is paid off more quickly.

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Can you keep overtime payments earned during an IVA?

You may get the opportunity to earn overtime. Because it is not guaranteed, this type of earnings will not have been included as part of your normal monthly income calculation.

However if at any time you do earn extra money, you must tell your IVA company. They will normally need you to pay some of it into your Arrangement.

Generally speaking you can earn up to an additional 10% of your normal income in any one month and keep all of this. But anything over 10% must be split 50/50 between you and the Arrangement.

So for example, if your monthly income is £1000 and you earn an extra £200 in overtime, the first £100 (10% of your normal income) is yours to keep. The next £100 is split 50/50. You therefore keep £150 and £50 is paid into your IVA.

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Does earning overtime mean your IVA will be paid off early?

If you earn overtime and pay more into your IVA, the Arrangement will not be paid off any earlier. You still have to make all of your remaining payments. Your creditors are just paid back more of their debt.

The only time your Arrangement could be paid early as a result of extra payments is if the extra you pay is sufficient to cover the total of your original debt plus fees and interest.

It may be possible to settle your IVA early if you can pay a one off lump sum. However this could not come from an overtime payment. It would normally have come from a third party.

What happens if you receive a bonus during your IVA?

It is possible that your employer will pay you a bonus during your IVA.

Bonuses are treated in the same way as an overtime payment. You will be allowed to keep the equivalent of 10% of your normal monthly income. 50% of the rest will have to be paid into your IVA.

You might receive a quarterly or annual bonus. This is associated with work carried out across a number of months. However the amount you have to hand over is calculated based on just the income for the month in which the bonus was received.

So if your monthly income is £1,000 and you receive an annual bonus of £1000 in December, you will be able to keep the first £100. The remaining £900 is divided between you and your IVA. As such overall you will keep £550 and pay £450 extra into your IVA that month.

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    20 thoughts on “What happens to overtime during an IVA?

    1. Todd says:


      Just wondering If my IVA was to fail. Would my debts gain all the interest from when i started my IVA?

      1. James Falla says:

        Hi Todd

        If you fail your IVA then interest may be added to the original debts yes. It is always a possibility. Whatever happens you will normally still owe a large percentage of your original debt (particularly if the payments you made into your IVA were relatively low).

        Given this it is not ideal to let your IVA fail unless you have a sensible plan for dealing with the debt afterwards. If you are not a home owner (or you are but there is no equity in your property) a sensible way forward might well be bankruptcy. With this solution all your outstanding debt will be written off (whether interest has been added or not). In addition if you can’t afford to make further payments towards the debt you don’t have to.

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