Mel
From what I have read the Protocol doesn't stipulate what the 6 months payment break is to be used for only that it is at the supervisors discretion. This is your personal belief of what it should be used for but others have given payment breaks for a variance of reasons and would not be outside of the protocol as it doesn't specify certain criteria.
If someone has overspent and cannot afford their payments or have held back considerable income then I personally think it would be fairer for the creditors to be brought to the table to have an option to forgive the breach and under what terms for example an extension of the agreement rather than just allow a payment break to make up the money. Or to fail the IVA if the breach is significant enough and shows the debtor truthfully has no intention of keeping to the payments.
If someone has an essential bill to pay for something then maybe lowering the payments with your 15% could be an option to allow for the payment of the item as for those months part of their essential I&E could be to save or pay for that essential item. If however a boiler packs up or your electricity is faulty and condemmed and you have to pay thousands to get it rectified to have a suitable home to live in then yes I think a payment break is the best option added to the end of the term and not expected to be added on throughout the rest of the term if that makes the payment exceptionally high and forcing the debtor to perhaps fail the IVA through no fault of their own. Especially as the new protocol was designed to save so many variation meetings and costs to the creditors for something that the supervisor could really sort out themselves whilst still maintaining a good return for the creditors in a timely fashion.
Out of curiosity what methods would you normally use to rectify a missed payment due to an essential repair? One of the reasons I ask is that whilst googling some companies have insinuated that before the new protocol the 2 failed payments was allowed without failing to cover for people who missed payments and not with genuine reason but only failed if they missed a third payment during the IVA. It also states that if a payment break is taken then the same amount of months are automatically added to the end so why are people protocol compliant be told that they have to pay it back with additional payments if the protocol dictates otherwise?
The excerpt is here
Payment Breaks for IVAs agreed before 1st February 2008
It is usually written into the older IVA proposals that the Individual Voluntary Arrangement will be failed if a client misses in excess of 2 payments over the duration of the Individual Voluntary Arrangement, but this generally is designed to cover the scenario of a client just refusing to make contributions as a matter of choice, and not people suffering with an honest problem with payments.
If a client’s circumstances change due to an unforeseen problem, for example, loss of employment, then provision can be made, at the discretion of the insolvency practitioner, to allow the client to temporarily suspend payments for a short period, and then resume payments when the circumstances improve.
The client’s Individual Voluntary Arrangement payments would normally be required to be increase for a short time, to catch up on the missed payments that the problem caused, but if this is not possible, extending the term of the IVA may also be a option for the insolvency practitioner to consider.
And so, by keeping the Insolvency Practitioner informed of your on going situation throughout the troublesome period, you massively reduce the risk of your Individual Voluntary Arrangement failing due to your payment problem.
Payment Breaks for IVAs agreed after 1st February 2008.
The IVA protocol has really helped IVA applicants when it comes to payment problems. Previously, as stated above, Insolvency Practitioners were given little scope to assist their clients when their financial circumstances took a turn for the worst, but now they have a couple of options available.
At the Insolvency Practitioner’s sole discretion and subject to the correct confirmation and validation of the need for a payment break, payments into the IVA can now be suspended for up to 6 consecutive payments, without the need for the Insolvency Practitioner to seek further agreement from the creditors.
The IVA protocol stipulates that, in the event of a payment break being taken, the term of the IVA will be automatically extended to an equal number of months as the payment break itself.
In the event that a longer payment break than 6 months is required, the Insolvency Practitioner would call a variation meeting to the IVA, which would give the creditors an opportunity to agree or decline any further suspension of payments.
Alongside this new policy, the IVA protocol introduced the ability for the Insolvency Practitioner, again at their sole discretion, to reduce the IVA payments buy as much as 15% of the agreed payment level, before the need to seek approval from the creditors.
These new ‘IVA Protocol’ terms gives the IVA applicant an unprecedented level of support that, even in the most difficult of financial circumstances, should give a real chance for the IVA to succeed.
This level of flexibility has helped save many thousands of IVAs which would have been destined to failure under the older IVA terms and conditions, which would have failed for no greater reason than a change in the applicant’s circumstances. Added to this the substantial savings the creditors have made of many thousands of pounds in fees, that would have been created by all the unnecessary work being undertaken by the Insolvency Practitioner.
DaveyBoi - Just Keep Smiling
