www.iva.co.uk

Hi,

I've been in my IVA now for about 16 months.

When it was agreed a part of my income was made up of a cash for cars allowance (£5750 p.a. less tax & N.I. - approx £335 take hme per month). However my IVA only allowed for £204 per month for running the car.

Currently my cash for cars allowance is the same and my IVA expenditure allowance has increased to £223.

The problem I have is that my car no longer meets the companies requirements (it's over 5 years old and the emissions are too high).

My two options are:

1 - Get a new / nearly new car.
2 - Take out a company car.

Option 1 is not possible due to insufficient funds / inability to get a loan or even repay one.

Option 2 is possible but would mean losing my £5750 allowance, plus paying extra tax on the car - reducing my take home pay by around £425 per month, but saving me around £225 per month - thus a net loss of income of £200 per month.

To further complicate matters I have just had a small pay rise which means my net loss would actually be around £150.

Would it be possible to reduce my IVA payment (Currently £409) to allow me to take up a company car?

Thanks for reading.

Hi
It is a difficult one.
A 150 pound reduction is quite a chunk but on the other hand you need a car for work.
You really need to have a chat with your IP, If you take the Co car option you could sell your current car and introduce the funds into the IVA. This will bridge some of the shortfall of 150 pound over 44 months [6600]
Regards

I think that this is a very reasonable suggestion, and whilst this will result in a reduced return to creditors there is no better alternative for them. You may have to compromise and offer an extended term - but limit this to no more than 12 months. And Andy's suggestion to introduce the sale proceeds into the IVA is sensible - coupled with the fact that your tax code may take a few months to change.

Melanie, I've already paid an extra £4000 or so into the IVA due to a successful PPI claim, would this not count towards any shortfall thus minimising the necessity to extend the IVA?
With future pay rises etc. I'm sure I'll be able to meet my original dividend.

Hi
I think it is unlikely that you will need to extend the IVA given the PPI and future car lump sum.
Regards

The £4,000 is a windfall and therefore does not compare with the reduced disposable income as creditors would have benefitted from that in any case - but if you can get away without an extension then go for it - but a variation will need to be called and these days (in my experience) creditors are going for as much as they can get.

What's the next step? Do I take the company car first and then the variation or the other way round?
Would the extension of the term be applied straight away or only if I fail to make the original dividend?

Thanks for the advice.

It would be safer to get the variation agreed first - but at the end of the day you have no real alternative. Get advice on this directly from your IP who has detailed knowledge of your case.