It is important to to understand that your IVA payments are not fixed. They can go up during the Arrangement.
- Are your IVA payments allowed to increase?
- What happens if your income goes up
- Affect on your payments if your living expenses fall
- Could your IVA payments ever go down?
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Are your IVA payments allowed to Increase?
Your payments will be based on your disposable income. Once the Arrangement is agreed this amount is legally binding. As such your creditors cannot simply decide they want you to pay more and ask for a change to the monthly amount out of the blue.
However the payments you make are not necessarily fixed. If there is a change in your circumstances, they could go up or down.
What happens if your Income Goes Up?
If you have had an increase in your income due to a recent pay rise of for any other reason you will have to inform your Insolvency Practitioner (IP) and your disposable income will be reviewed. If this has increased then it is likely that your ongoing monthly payments will also increase.
By how much? 50% of the additional disposable income
What if the increase is temporary for example you do extra overtime or get an annual bonus?
The Affect on your IVA Payments if your Living Expenses Fall
If you have a decrease in your living expenses which means that you can now afford to pay more into your IVA you must inform your insolvency practitioner (IP) of this. They will expect you to increase your payments accordingly.
Affect of things that are known eg car finance or secured loan payment comes to an end
Normally the full amount of the fall is added to your IVA payment. Not 50%
Could your IVA Payments ever Go Down?
If your income falls or you have a material increase in your living expenses meaning your disposable income reduces it may be possible for your IVA payments to be reduced. However this does not happen automatically and it will depend on whether your new payments will still be sufficient to return a realistic amount to your creditors
Your IP will review your new income and expenses budget. If your disposable income has reduced by less than 10 percent then they can authorise a reduction in your payments without discussing this with your creditors. However if the reduction is more they will have to ask your creditors to agree this in a formal variation of your IVA.
Your creditors may agree to a variation reducing your monthly payments. However they will normally also insist that the number of payments you make is extended by up to 12 months to compensate.
If you lose your job during an IVA the outcome will really depend on how likely it is that you will be able to get more employment and when this will be.
If the reduction in your income is only temporary you should consider a payment break rather than reducing your payments.
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