Scooby
If you are made redundant from your job, as has already rightly been pointed out, the first thing you must do is let your IP know. Its is likely that they will be able to suspend your monthly IVA payments and give you a payment holiday. This will give you a breathing space while you find a new job. Generally your IP will be able to give you up to 2-3 months break without a great problem.
Once you get a new job, there are three scenarios:
1 – You find a new job on the same money
This is the ideal scenario. It means that you should be able to start making the same IVA payments again without a problem. All that happens is that the months you have missed will be added to the end of your IVA. In effect, you will make the same number of IVA payments but the ones you missed in the middle will be added to the end.
2 – you find a new job but with less money
If this happens, then the only way you are likely to be able to continue with your IVA is if your payments are reduced. To achieve this, your IP will have to propose a variation of your IVA to your creditors. As long as the variation and reasons for it are reasonable, then very often the creditors will accept the change even if this means that their dividend is reduced. They may of course ask for some additional payments to be added onto the end of your IVA to compensate.
3 – You find a new job on more money
If this happens, then you will be able to restart your IVA payments, but you might be asked to increase them. You will not necessarily be asked to hand over the whole of the increase. The additional amount you pay will depend on other factors such as whether as a result of the new job, your have any additional monthly expenses (eg additional travel costs).
What happens if you can not find a new job at all?
If you are made redundant and just can not find alternative work, or loose your job through medical reasons preventing you form working again, then payments to your IVA will clearly have to stop. What happens next will very much depend on your financial situation and how long you have been in your IVA.
For example, if you are given a lump sum as a redundancy package, your IP may well be able to negotiate a full and final settlement of your IVA using some or all of the lump sum. If you do not receive a lump sum but have already paid a significant number of your IVA payments, your IP may be able to agree with your Creditors that the IVA should be settled early based on what you have paid to date as they are unlikely to ever receive any additional payments.
The worst case scenario is that you can not find new employment, you have no lump sum and your creditors will not agree to settle early. In this situation, unfortunately it is likely that your IVA will fail. You amount you owe will then revert to the original sum outstanding before the IVA was introduced. At this point, your IP may decide to declare you bankrupt. If not, you will need to decide whether you want to do this yourself or consider a Debt Management Plan.
James Falla
Expert in IVA, Bankruptcy and informal Debt Management solutions, with extensive experience of solving personal debt problems over the past 10 years. I am regularly featured on BBC News, Finance Programs and Radio.
Visit my blog at:
http://jamesfalla.blogs.iva.co.uk
