As recently publicised, from January 2013, certain higher rate taxpayers will lose their Child Benefit entitlement. I fall into that category and am wondering if anyone has been in this situation when submitting I&E details for the forthcoming year?
I'm worried how creditors will react as my disposable income to pay the IVA will fall by around 55% !!
Anyone dealt with this yet in their IVA plans?
IVA Accepted - Sep 2009
F&F Accepted - Oct 2014
CC Received - Jul 2015
There must be many people in IVAs that will experience the same reduction. Your payments into your IVA will simply have to reduce as your disposable income will reduce.
I wonder if IPs have a plan of action for dealing with this on a mass scale ?
That's what I'm keen to discover and fairly quickly. Will it require a variation and possible change of terms etc? Quite nervous about it to be honest, already committed to 69 months and have battled to get half way so really not wanting to discover we need to extend this any further. It would take another 30 months to make up the difference!!
IVA Accepted - Sep 2009
F&F Accepted - Oct 2014
CC Received - Jul 2015
I am sure creditors will be sympathetic but unlike Andy I think they may ask for an extension of twelve months. Even though this is the fault of government creditors and their agents will look at dividend and make their decision on that. It would be unfair but they know there is nothing you can do about it.
I've discussed with my IP and it looks as though I will have to wait until January when the cuts comes in and then see how creditors react to the payment reduction.
I had hoped that perhaps the various IVA companies had a plan to mitigate this cut as there will be quite a few people affected. Perhaps that was unrealistic though as everyone's individual circumstances are different but I would prefer to know in advance what the likely impact is and be able to plan accordingly.
IVA Accepted - Sep 2009
F&F Accepted - Oct 2014
CC Received - Jul 2015
Michael, Surely an extension would only be sought if a set dividend had been agreed in the proposal. Wouldn't a loss of income, whatever the source, be dealt with in the same way with a variation and a change to the monthly payment amount in line with the I&E?
Hi Diddy, Creditors can ask for an extension any time a variation to reduce payments is proposed. It isn't dependent on a miniMum dividend. Kind of makes a mockery of 'affordable over a set term' but was aren't in a strong position to argue!
I'll have lost my tax credits the same as PD and Chid Benefit in August/September, I'm hoping to just ride the next few months without alteration but if I had a longer term I would need to sort it with my IP. x
IVA final payment left the bank on the 26th January 2013...looking forward to a debt free future.
If the IP has to go back to creditors for a reduction in payments it gives them a chance to extend the IVA irrespective of whether there was a guaranteed minimum dividend or not. I doubt if they will just accept a reduction when they know they can get more.
Lots of people will fall into the category of losing child benefit, and IPs will deal with this as necessary as and when their clients notify them of actual rather than anticipated changes.
I will personally fight for all of my clients not to have their IVAs extended. The removal of this benefit is through no fault of their own and it is simply not fair for creditors to penalise peopld in this manner.
