Coping with debt when you’re planning to start a family
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Life isn't predictable - which is why your IVA payments could change if something happened and that meant your payments weren't realistic anymore.
Yes they can, if they need to. An IVA is quite a flexible way of dealing with serious debt problems - most IVAs last for five years, and lenders understand that things can change in that time.
• Your mortgage payments might go up (or down)
• Your utility bills might go up
• You could start a family
• You could get a pay rise
• You could have to take a pay cut.
These are just examples of things that might happen over a five-year period - and any one of them could mean the original terms of your IVA just aren't realistic / fair anymore. It doesn't mean your IVA would fail straight away!
As always, if you're in an IVA and you have any questions about it, you should contact your Insolvency Practice straight away.
If for any reason your payments can't be changed (e.g. if your lenders don't agree), or if you can't commit to regular payments anymore, then your IVA will fail - in which case bankruptcy may be the only option.
If you've not actually started an IVA and you just want to know more about how it would work, there could be a different approach that would suit you better. Try our debt solution finder to find out more about your options.
Your lenders want your IVA to succeed
Remember your lenders want your IVA to succeed. If you're already on an IVA, that means most (or all) of them accepted your IVA proposal when they voted on it.
So they'll be willing to think about accepting a few changes if it looks like the best way of bringing your IVA to a successful close. You might be able to take a short 'break' from making payments, for example, or you might be allowed to start making smaller payments (but make them for longer).
Your IVA also has to be fair to your lenders. But remember your IVA is meant to be fair to your lenders as well as you. You're supposed to repay as much as you can afford, so you'll probably have to pay more if your situation gets better and that means you can afford to.
• So if you got a pay rise, your contributions to your IVA would also go up.
• If you received a bonus, you'd probably have to put most of this into your IVA.
• If you got a 'windfall' that was big enough to pay off your debts in full, you might be able to make a 'final settlement' (a lump sum that would settle your debt and bring your IVA to a close).
Small change or big change?
Every IVA is different, but in general:
• If you're talking about a big change to your situation (like having to take a lower-paid job), your IP might have to arrange an IVA variation - a lasting change to your IVA, which would have to be approved by most of your lenders, like your original IVA proposal was.
• If you're talking about a temporary problem (like having to pay for something like car repairs, so you can't afford a payment or two), this probably won't be needed - it might just be covered in the terms of your IVA.
If you have any questions about IVAs (or anything else to do with debt or money), one of our advisers will be happy to help. Call us on 0161 605 4810 or fill in the 'Request a callback' form on this page.
by Kyri LevendiBack to blog home