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What happens if my wages go up during my IVA

What happens if my wages go up during my IVA

What happens if my wages go up during my IVA

It is likely that your wages will go up during your IVA. If this happens, your monthly payment will also increase. However this doesn’t mean the Arrangement will be paid any faster.

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Struggling with your IVA payments? Give us a call (0800 077 6180) or complete the form below. The advice is free and confidential

When your wages go up will your IVA payment increase?

After your wages go up, your IVA payment is also likely to increase. However, it does not go up automatically by the same amount.

Before there can be any change, your IVA company will need to carry out a review of your income and expenses budget.

When you submit your new budget, as well as the change to your income, it is very important to highlight any increases in your living expenses.

Make sure you include all specific expenditure increases which are directly associated with your increase in wages. Good examples of these are things like higher child care and travel or fuel costs.

If the review shows your surplus income has gone up, your IVA payment goes up by 50% of the increase.

For example, if your were paying £100/mth and your surplus goes up to £250, the difference is £150. 50% of this is £75. So your payment will go up to £175.

Struggling to get your head round all of this? We can help. Call us (0800 077 6180) or complete the form below. The advice is free and confidential.

Is your IVA paid off faster if your wages go up?

Your IVA will not be paid off faster after your wages go up and the payment you make increases. The number of payments you have left still remains the same. So if you still had 36 months to pay before your pay rise, you will still have 36 months to pay.

Given that you are now paying more each month, the result is simply that you will end up paying more into your IVA than you originally thought. Your creditors will simple get more back of the debt they were originally owed.

This situation is perfectly legal. Your IVA payments are not fixed. The terms of the agreement will state clearly that if you are able to repay more to your creditors after your circumstances improve, you must do so

Could you end up repaying more into your IVA than you originally owed?

If your wages go up, it is possible that you could end up paying back more in your IVA than the total of the debt you owed before you started. However, whether this will happen depends on how much your payment goes up and how many months of your IVA you have left to pay.

Where it is clear that you will end up paying more, you should review whether staying in your IVA is still the best option.

You may find that cancelling the agreement and then paying the remainder of your debt yourself using a debt management plan could be a better option. Alternatively you could consider just going bankrupt.

Remember, if you cancel your Arrangement, some or all of the money you have already paid in will be taken in fees. You may still owe most if not all of your original debt. You should not stop paying your IVA unless you have spoken to us first.

If you believe your IVA is no longer the best way to manage your debt, it is possible to cancel and switch to a different solution if you want.

Can you hide the fact that your wages have gone up?

You will not be able to hide a pay rise from your IVA company. If you chose not to tell them, they will definitely discover that your wages have gone up at your next annual review.

When you do your review, you will have to provide wage slips and bank statements (possibly for the last 12 months). These will certainly show the change in your income.

Waiting to tell your IVA company, is likely to cause you a significant problem. This is because any increase in your payment will be backdated from the date your wages went up. You will then face both the increase in your payments and extra on top to catch up with the arrears.

To avoid this problem, you should tell your IVA company that your wages have gone up straight away. The terms and conditions of your agreement will often state you should do so within 14 days of becoming aware of the change.

Need advice about your IVA after your wages have gone up? Give us a call (0800 077 6180) or complete the form below. It’s free and confidential.

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