What to do if you're struggling with IVA payments
IVA stands for Individual Voluntary Arrangement, it is a debt solution programme that allows you to come to an agreement with your lender over a set of new terms regarding your loan. This new arrangement will normally allow you to lengthen the term of your loan and at the same time reduce your monthly repayments.
IVAs can often be a good solution when it comes to reorganising you debt and reducing the strain that it has placed on your finances. In spite of this there are a number of risks that come with finding such an arrangement. In this guide we will examine what the best course of action for you to take is if your circumstances change and you find yourself struggling to meet your IVA repayments.
In This Guide:
IVA repayments have become unaffordable
One reason that you might become unable to afford your IVA repayments is suffering an unexpected change to your financial situation. If this is the case, the first thing that you should do is let your insolvency practitioner (IP) know your situation. If you don't inform them, then it becomes more likely that you will face legal action from your lender. This is because continuous failure to make your repayments can lead to the termination of your IVA altogether, resulting in the possibility of court action.
Short term financial issues
In the event that you experience an unexpected change in your financial situation that you to believe to be temporary, you may be able to seek help from your insolvency practitioner (IP). As long as your IVA was set up according to the accepted legal protocol, you should be able to be granted a "payment holiday" of up to six months - this can be done with or without your lenders consent.
If you honestly believe that you recent dip in financial strength will only be a problem in the short term, then this is probably the best route for you to go down. One reason that you might have suffered such a change is an illness or injury that prevented you from working and therefore impacted upon the income that you had at the beginning of the agreement.
If your Individual Voluntary Agreement was set up after 1st July 2012, your IP will be able to allow you a three month break from your repayments. They will do this as long as you are able to provide them with a valid explanation as to why your financial situation has changed. You will also need to be able to give a good reason as to why you believe it will only be a short term issue.
You will be required to show them evidence of the fact that you were ill and you will also be required to present them with proof of employment. It is important to remember that if you are granted a holiday from your repayments you will still be required to make them at some point later down the line.
Long term financial issues
In the event that you find yourself in a position where your finances are not improving and you have already secured a repayment holiday, you need to speak to your insolvency practitioner. There is a chance that they may be able to help you have your monthly repayments reduced even further. However this time you will need to attain approval from the majority of your creditors and you may need to provide additional payment to your IP.
In the case that you don't manage to receive the level of approval required to change the terms of your agreement, you will most likely find that your IVA will fall through and your creditors may start taking legal action out against you. In this situation what you should do is begin to approach each of your lenders individually to try and see if they will allow you to renegotiate the terms of your agreement with them. This is a vital step because if you fail to do this, you may find that many of your lenders begin bankruptcy proceedings.