If you are in an IVA, every year you will have to go through an annual review with your insolvency practitioner. This can be a bit nerve racking, however it also ensures your IVA has the best chance of success.
Jump to article contents:
- What is an IVA Annual Review
- IVA Annual Review – supporting information
- I earned more or expenses have fallen
- What if I cannot afford my payment
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What is an IVA Annual Review
It is important to understand that whilst you agree a monthly payment at the start of your IVA, this is not set in stone. In fact it is likely to change one way or another. You may actually have quite a lot of contact with your IVA company during your IVA. Certainly every year as part of their and your commitments, an IVA Annual Review will occur.
In a nutshell the review is to establish whether your financial situation is still the same or not. On the one hand the IVA has to remain affordable, otherwise in the end it would fail. On the other hand you are committed to paying as much as you can in an IVA, which may mean paying more if its affordable.
Whatever your situation at each IVA annual review, you will need to provide proof with supporting documents.
IVA Annual Review – supporting information
You will need to supply some paperwork in the same way as you did at the start of the IVA. This will normally include payslips and bank statements. Different IVA companies will require different amounts. However many will ask for statements for the full past 12 months.
You will need to look carefully at your household bills and check whether they have changed. This means looking through rent or mortgage statements, council tax, utility bills, car insurance for the last year. You should check also if these amounts are about to change. Your bank statements will not show these, but print out any proof that changes are coming.
Try to be ahead of the game with these documents. If you create any delays and there increases made to your payments, you may be asked to pay back dated amounts that you have not got. It is best to keep an open line of communication with your IVA company, this will help your IVA run smoothly.
If there are changes to your income or regular living costs, don’t wait until the annual review before telling your IP.
I have earned more or expenses have fallen
The reality is that in an IVA you agree to pay as much as you can afford for a fixed term in return for having any unaffordable debt written off. It is entirely normal for your income to have increased. In fact it would be odd if it didn’t during a 5 year IVA. However that does not automatically mean that your monthly IVA payment will increase.
Checking your expenses carefully is therefore very important at the annual review. Whilst you may think increases are small, they add up when looking across a range of expenses. Often increases in income are balanced out by an increase in expenditure – so your monthly IVA payment remains the same or similar.
By the same token, if your expenses go down and you have more surplus each month then you will have to pay more to your IVA. If you’ve got it you pay it, if you haven’t you don’t – that’s the deal. Try to stay calm when approaching your review, it doesn’t need to be stressful.
It is not in the interest of the IP to make your monthly payment unaffordable. If you can’t pay it, then IVA will likely fail and creditors will get no more money at all.
What if I cannot afford my payment
A reduction in income is always a concern. It may well be the reason that you can no longer afford your existing IVA payment. Small decreases of up to 15% can be approved by your IP without consulting your creditors. If the decrease is larger than this then you would need to apply for a ‘variation’.
This may still be acceptable to your creditors, but they do not have to accept it. It is possible that they may request that you extend the term of your IVA by perhaps a year to make up for the lower payments. You don’t have to accept this, but if not you would have to consider allowing your IVA to fail. You would then have to look at other ways of dealing with your debt.
Annual reviews are often very positive, ensuring that the IVA remains affordable and can run its full term. If you can afford to pay more, you will be expected to, but you are still writing off anything unaffordable at the end.