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Circumstances have changed - individual voluntary arrangements

This page tells you what to do if you have an Individual Voluntary Arrangement (IVA) and your circumstances change. For example, if you receive some inheritance money or lose your job.

You can no longer make payments

If your circumstances change and you can no longer make the payments into your IVA, you should tell your insolvency practitioner (IP) straight away. You might be able to pay a lower amount. If not, it might be best for you to cancel your IVA.

Your income increases

If your income increases you should tell your insolvency practitioner (IP) immediately. For example, you may have a new job or received some inheritance money. If you don’t tell the IP you will have broken your IVA agreement. Your IP will be able to find out about your finances through the annual review they carry out.

You may have to increase your payments into your IVA.

Your IVA may contain a windfall clause. A windfall is money unexpectedly received during the period of an IVA. For example, winning the lottery, an inheritance or large bonus payment. If your IVA has a windfall clause, you will have to pay the money into your IVA.

If you don’t tell your IP about your change in financial circumstances you could be breaking the law.

Pensions

If you start taking money from your pension while on an IVA, this will count as income and you should tell the insolvency practitioner. You may have to pay some of it into your IVA.

If you have a 'defined contribution pension' and become 55 years old during the term of your IVA, you could cash in some of your pension to pay into your IVA. Your IVA may already include an agreement that you have to pay some of this into the IVA. This is something that should have been discussed with you and agreed before the start of the IVA. You should get advice from an independent financial adviser before agreeing to use your pension savings. A ‘defined contribution pension’ is based on how much has been paid into your pot, not your salary near retirement.

Bonuses and commissions

If your IVA was set up after July 1st 2012 and 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 fourteen days of receiving it. You will only have to pay half of the amount over the 10% into the IVA.

What else should you tell your insolvency practitioner?

If you have an IVA you must tell your insolvency practitioner if your personal circumstances change. It will be a breach of your agreement if you don’t tell them when things change. For example, you must tell them about:

  • changes to your job
  • other debts you have that you had forgotten about
  • if you get into more debt
  • your find yourself with more spare income each month
  • you move house.

If you’ve had a change in circumstances and you’re not sure whether to tell your insolvency practitioner, you should contact them.

Next steps

Other useful information

There is a voluntary code of practice, called the IVA Protocol, which all insolvency practitioners and most creditors have signed up to. The protocol makes sure the processes involved in setting up and managing an IVA are clear and fair. It also sets out the terms and conditions all parties must follow.

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