Illness when in an IVA IVA Issue
Summary: Illness when in an IVA - This article explores the implications of falling ill whilst undertaking an IVA (Individual Voluntary Arrangement) and the resulting steps that should be taken.
When illness strikes
No one can predict all that will happen during the life of an IVA. Like any other change of circumstances, if illness strikes then the IVA supervisor should be informed. Of course a short term illness may have no financial implications. However whenever our income suffers for any reason, it will impact our ability to maintain IVA payments.
Short term illness
Assuming income levels are affected and the debtor in an IVA has to take a drop in income, possibly by receiving statutory sick pay, it may well be possible to take a payment break from the IVA. This would of course need to be discussed with the IVA supervisor. Thus the effect of the illness will result in only a limited change to the IVA.
Long term illness
Obviously this situation is likely to cause further complications to an IVA. The presumed loss of income may well render the continuation of the IVA impossible. Under these circumstances the IVA supervisor will outline the alternative options, and it is likely that bankruptcy will figure highly in those options.
As with any change of income, the resulting changes of outgoings also need to be borne in mind. If someone has had to stop work there should be savings also - travel costs to work being an obvious example. It may be that a car is not necessary in the same way. Furthermore, illness may bring entitlement to certain benefits meaning that the drop in income isn't as much as first feared. Together with the IVA supervisor, the debtor in an IVA will need to draw up a new income/expenditure analysis to see if an IVA (possibly at a reduced payment level) remains a possibility.
Full & Final IVA
Whenever disposable income falls, it's worth exploring whether a lump sum settlement of the IVA is a possibility. If there were a friend or family member who was prepared to help by offering a gift/loan then the IVA may be able to be settled despite the loss of income through illness, redundancy etc.