Income changes

[Andy C]

Hi,

I have a couple of questions with regards income changes

1) If my income was to reduce drastically mid term on my IVA what options do I have if I cannot meet the agreed payment? will they review mid term?

2)If No, and bankruptcy was the only option what are the general rules for bankruptcy? if I was declared bankrupt and the Judge's decision was to make me pay 'A' figure from my reduced income would this be reviewed against ernings as an IVA yearly?(as I would be looking for a better paid job)

Thanks

[Michael Peoples]

If you income changes at any time for any reason your IP can reduce the payments by up to 15% or if required ask creditors for permission to reduce it even further. You can get payment breaks, offer full and final settlements and in some cases your case could be closed down before the end of 60 months based on all the payments to date.

In bankruptcy your payments do not change after the first year but can be adjusted up to this point.

[Andy C]

Thanks for the info just to clarify... If I were bankrupt and my income was £1000 per month and I got a new job on £1500 a month my payment would increase but only in the 1st year whatever happens after this the payment amount is fixed until discharged??

[kallis3]

I think that your payments would increase. The OR would need to be notified of any changes in income, up or down.

Not 100% on that though.

[Andy C]

I am just trying to work out my best option as I am unhappy in my current job and I have already turned down a better paid job due to the fact the IVA rules would take 50% on any additional surplus after taking the travel involved ect and the additional pressure in the job I decided to turn it down. I am now regretting that choice. I was wondering if the same rule applied in Bankruptcy the payment changes on review yearly or otherwise?

[Michael Peoples]

Your bankruptcy only lasts for a year but any payments are made for three. Any changes after discharge are ignored but not those while you are actually bankrupt.

Hope this makes sense.

[kallis3]

I don't think you have a review as such, but you would be expected to notify the OR if your income increased.

In BR you pay between 50 and 70% of disposable income over £99 (once your normal expenses have been paid). This is on a sliding scale.

Do you have any assets, such as a house, that you might lose if you went BR?

[Skippy]

I think the wording the the IPA paperwork is now that you must notify the OR of any changes in income for the duration of the IPA, whereas the old wording was that you would notify them until discharge.

[Andy C]

I have no assets at all I am just looking at all options to draw a line under the past 7 years and I am considering BR as an option, like I said I feel a little trapped by the fact if your offered a better job you automatically lose 50% of the extra disposable income and in my line of work the increase isnt worth the stress to lose that much, also I am worried if I loss income what would happen. At the time and IVA was probably the best option for me but now I am unsure ??!!!

thanks again for the replies

[kallis3]

You don't automatically lose 50% - your expenditure may well have gone up as well. I've had two payrises since starting my IVA and my payments haven't altered at all

Why don't you give one or two of the companies on www.iva.com a ring for some free and impartial advice?

[Skippy]

Are you currently in an IVA and if so can you manage the payments at the moment? If you are struggling the first port of call should be your IP as they may be able to reduce payments for you.

[Andy C]

Skippy, yeah I am 15 months into an IVA I am managing with payments what I am struggling with is anything out the ordinary i.e. I have 2 boys so birthdays holidays and I am dreading christmas how do you factor these things in!!??? I am also dissapointed with IP as they did not explain the yearly review and how if your income increases your payment will also increase. I was offered a decent job and decided to turn it down after considering these factors.That is why I am now considering BR as if I am reading the above correctly your payments are fixed after the 1st year regardless of pay increases or changes in income?

[Skippy]

It's a shame to give up on your IVA after 15 months, and don't forget that your credit rating will be shot for a further 6 years from the date of the BR order.

If you have disposable income you will be expected to pay up to 70% of it into an Income Payment Agreement which lasts 36 months.

If you have an IPA you have to notify the OR of any changes in your circumstances for the duration of the IPA, not only until you are discharged - the wording was changed shortly after I went BR in 2007. Your IPA contributions would then be increased or decreased accordingly.