I can’t afford to pay my IVA – what can I do?

I can’t afford to pay my IVA – what can I do?

If you can’t afford to pay your IVA it might be possible to reduce your monthly payments. However there are implications and alternative options you could consider. 

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Is it possible to reduce your IVA payments?

Perhaps you can’t afford to pay your IVA because your income or expenses have changed. Maybe your income has dropped because you have changed jobs or lost your overtime. Alternatively some of your specific expenses such as rent, mortgage or child care might have increased. 

In these circumstances it might be possible for your IVA company to reduce the amount you pay. They will first ask you for a revised income and expenses budget which highlights the changes. If they agree that your disposable income has fallen they may be able to reduce the payment amount to fit your new budget. 

Where the reduction in your payments is less than 10% your IVA company can implement this themselves. If it is greater they will need the agreement of your creditors. Either way to compensate for the reduction they will extend the length of your IVA. An extra 12 months of payments will normally be added although in some circumstances this could be 24. 

Your IVA company consider reducing your payments as a result specific increases in your expenditure. It is not normally possible where you feel the cost of living has simply increased in general. 

If you can’t afford to pay your IVA should you take a payment break?

The reason you can’t afford to pay your IVA might be temporary. Perhaps you are facing unexpected emergency expenditure. Alternatively a period of illness might mean your income has fallen. You are however confident your income will increase again in the short term.

In these situations a permanent reduction of your IVA payments is not necessary. Instead you should speak to your IVA company about suspending your payments altogether on a temporary basis. This is known as a payment break.

Once the emergency has been paid for or your income improves again you then restart the standard IVA payment amount. The payments you have missed are then added to the end of the agreement. You don’t have to try and find extra money each month to make them up. 

You should be able to take up to 9 months of payment breaks during your IVA if you need to. The Arrangement is extended so the missed payments missed are made up at the end. 

Can you stop your IVA and choose a different debt solution?

It may not be possible for your IVA company to reduce your payments. This can be the case if the amount you pay is already less than £100/mth. Any further reduction would mean the return to your creditors would be simply too small to make the ongoing arrangement viable.

Where they are unwilling to reduce your payments any further you have only two options. The first is you have to make savings in your expenses budget. But if this is impossible you are allowed to stop your IVA. You will then be able to use a different solution to manage your debt.

If you can afford to make an ongoing payment you could consider starting a new IVA with a different company or a debt management plan. Where you have no disposable income and you are not a home owner considering bankruptcy might actually be the best option for you. 

Can’t afford to pay your IVA and want to change to a different solution? Give us a call (0800 077 6180). We can help you decide what to do next.

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