If your circumstances change during your IVA
You have to tell your insolvency practitioner if your personal circumstances change. It’s a breach of your agreement if you don’t tell them when things change. For example, you should tell them if:
- your income goes up or down
- you change job or lose your job
- you realise you have other debts you haven't already told them about
- you get into more debt
- you move house
If you’ve had a change in circumstances and you’re not sure whether to tell your insolvency practitioner, it’s safer to contact them.
If you can no longer make payments
If you can no longer make the payments into your IVA, you should tell your insolvency practitioner straight away. You’ll usually be able to make changes to your IVA if your financial circumstances change. Find out what to do if you're struggling to pay your IVA.
If you’re made redundant during your IVA
You'll need to tell your insolvency practitioner you're being made redundant and how much redundancy money you're getting. You should tell them within 2 weeks of your redundancy being confirmed.
You'll get to keep 6 months’ worth of your take-home pay from your redundancy money. If you have any money left over, you’ll have to put that towards your IVA.
If you don't tell your insolvency practitioner you’ve been made redundant, you could be breaking your IVA arrangement.
If your income goes up
You should tell your insolvency practitioner immediately. For example, you might have started a new job or got some inheritance money. If you don’t tell your insolvency practitioner you'll have broken your IVA agreement. Your insolvency practitioner will be able to find out about your finances through the annual review they carry out.
You might have to increase your payments into your IVA.
Your IVA might contain a windfall clause. A windfall is money unexpectedly received during an IVA. For example, winning the lottery, an inheritance or large bonus payment. If your IVA has a windfall clause, you’ll have to pay the money into your IVA.
If you don’t tell your insolvency practitioner about your change in financial circumstances you could be breaking your IVA arrangement.
If you start taking money from your pension
This will count as income and you should tell your insolvency practitioner. You might have to pay some of it into your IVA.
If you have a 'defined contribution pension' and turn 55 years old during your IVA, you could cash in some of your pension to pay into your IVA. A ‘defined contribution pension’ is based on how much has been paid into your pension pot, not your salary near retirement. Your IVA might already include an agreement that you have to pay some of this into your IVA. This is something that should have been discussed with you and agreed before the start of your IVA.
You should get advice from an independent financial adviser before agreeing to use your pension savings. You can find out about getting financial advice.
If you get a bonus or commission
If your IVA was drawn up under the IVA Protocol, it will include a term which says you only need to report any overtime bonus or commission where this is more than 10% of your normal take home pay. You must tell your insolvency practitioner about the extra money within 14 days of getting it. You'll only need to pay some of your bonus into your IVA.
If you realise you forgot to include a debt in your IVA
You must tell your insolvency practitioner about the debt straight away.
The creditors of your debts you’d forgotten about are called ‘unknown creditors’.
Your IVA is legally binding on any of your unknown creditors that are discovered later on. This means they must stick to it and they can’t take any other action against you to get their debt back. Some of your monthly repayment will go to them.
Your IVA must include terms and conditions for how any unknown creditors will be paid if they are discovered later on. Unknown creditors are entitled to receive some of your monthly payments, even if you don't discover them until after your IVA has finished.
If your unknown creditors aren't happy with the arrangement you've made, they can apply to the court to challenge your IVA. They have 28 days from the date they find out about your IVA to challenge it.
If you don’t think you owe the debt, you should tell your insolvency practitioner this and that you want to challenge it.