You might be able to change your IVA payments once the agreement has started. First you must agree any increase or decrease with your IVA company. Also, understand how the length of the agreement will be affected.
Included in this article:
- Can you change your IVA payments so you pay less?
- What if your IVA company will not change your payments?
- Will your IVA end sooner if you pay more?
- How can you pay your IVA early?
Struggling with your IVA payments? Give us a call (0800 077 6180) or complete the form below. The advice is free and confidential.
Can you change your IVA payments so you pay less?
If you are struggling with your IVA payments, it might be possible to reduce them so you pay less. You need to try to do this if you can no longer afford the agreed amount. This might be because your income has fallen or your living expenses have increased.
You can’t just decide to change the payments yourself. You need to get agreement from your IVA company.
They have to review your income and expenses budget. They are likely to ask for proof of any changes (for example wage slips or bank statements). If the reduction you need is more than 10% of your original payment, your creditors will also have to accept the change (known as a variation).
It is important to understand that if you start paying less, the length of your IVA will be extended. The extension will normally be between 1-2 years. In other words an extra 24 months payments could be added.
In June 2022, many IVA companies were told they can now reduce IVA payments by up to 50% if required to assist with the current cost of living crisis.
What if your IVA company will not change your payments?
Your IVA company might not always be able to change your payments to make them lower.
Where you are already paying the minimum amount required for your agreement, reducing this any further may not be possible.
Generally speaking the lowest payment you can make into an IVA is £75/mth. However, your IVA company may feel your agreement is no longer sustainable if you fall below £100 a month.
An alternative to making your payments lower is to consider a payment break.
A payment break lets you suspend your payments completely for a number of months (up to 9 in total). However this option will only work if the reason you can’t pay your IVA is temporary. It will not work if your circumstances are unlikely to improve within a few months.
If your IVA payments can’t be reduced and a payment break won’t work or can’t be extended, your IVA will probably fail. Call us to discuss the alternative options open to you.
Will your IVA end sooner if you pay more?
Paying more into your IVA does not mean that your IVA will be paid off quicker. If your monthly payment goes up, the number of payments left normally stays the same.
In other words, the outcome of a payment increase is simply that you pay more than originally agreed and your creditors get more of their money back.
For this reason, it does not make any sense for you to try and change your IVA payment so you pay more. But you may not have a choice.
If your income goes up or your living expenses fall, then under the terms of the agreement, your payments are likely to go up regardless. You are legally obliged to tell your IVA company of any such change and they will calculate your new payment.
There is an incentive for you to increase your income and therefore your payments. This is that only 50% of the extra you earn is be added to your monthly payment. The other half is yours to keep.
How can you pay your IVA early?
Although you can’t pay your IVA any faster by increasing your payments, it is possible to pay it early if you can offer a cash lump sum.
The amount needed to settle the Arrangement in this way is normally the equivalent of the sum of your remaining payments. So, if you are paying £200/mth with 3 years to go, you will have to offer £7,200 (£200 x 36 months).
The funds required to pay an IVA early have to come from a third party. This could be could be your partner, family member or friend. But they can’t come from you.
If you receive a windfall such as an inheritance payment, these funds would have to be paid into your IVA.
Need help to change your IVA payments? Give us a call (0800 077 6180) or complete the form below. The advice is free and confidential.
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