Need help with pay rise.

[Steve1993]

Right guys this is my first post on here so bare with...

Currently paying £221 pm for 60m.

We’re due our second child and universal credit will be increased by about £200.

Also I have been promoted at work and due a significant pay rise.

I have re worked my surplus and it’s coming out around £750!!

Will they require me to pay this pm? For the remainder 54 months. I’m only 6 months in!!
If that’s the case il be paying £40,000! My original debt was half that. Where do I stand with this?
Any help or advice welcomed.

[Foggy]

You will only be required to pay in 50% of the income increase each month. Some IPs still wait until the next review to deal with this, but a few, these days will apply the increase right away.

As for the total you pay in the arrangement --- if, for the sake of this arguement, you were asked to pay £750 per month, the IVA would end early once you hit the full original debt figure, plus fees and possible statutory interest.

[Steve1993]

Thanks for the reply.

Ok so would they only take 50% even after my annual review?

[kallis3]

That should be right but check your paperwork.

[ashbock123]

You will have to do your income and expenditure again. As if you having second child food costs and everything will go up. And may come out about the same as the payments are now.

Will be able to claim more money for things with a new baby.

Ki

[Steve1993]

This is the response I had when I asked what effects does a pay rise have on my iva. Can some explain this in laymen’s terms...

Thank you for your recent email.

If your pay increases by more than 10% a review will need to be completed as you’d be exceeding your current threshold every month. You’d be given a new threshold based on your new income.

If it’s less than a 10% increase you shouldn’t exceed your current threshold, but if you were to, you’d be expected to pay in 50% of the difference between your net pay and the threshold in the month you’ve exceeded it.

The annual review which is completed every year takes into account all changes to your income and expenditure, so your IVA payment can change each year depending upon your circumstances.

If your pay increases and it results in an increase in your available surplus for the IVA, you’ll be given a net surplus adjustment.

The net surplus adjustment is calculated when your payments are due to increase. Under the terms of your IVA, you’re allowed to keep 50% of the difference between the IVA payment last agreed by creditors and any increased IVA payment. The 50% you’re allowed to keep is called the net surplus adjustment and you can use this to cover any expenses not shown in your budget before your next review.

This amount would show as an item in your expenditure but it won’t be allocated to any costs so it is your own surplus to use however you wish.

I hope this has answered your query.

[JustPlainStupid]

Your circumstances with your pay are similar to my situation. I started off with a payment of £780 a month which would have meant I paid back about 45% of the debt. After about a year, my circumstances changed dramatically and my payment went up to £1769. This means I'll pay back 100% of the debt including all fees within 5 years and skip the equity release year.

It sucks a bit but I'm looking forward to getting that back each month. I'm a contractor so next year I'm going to get hit hard with IR35. I could ask for an adjustment but I'll be so close to finishing that I'm not going to bother. The money I start getting in my pocket when the IVA finishes will just about cover what I lose when IR35 comes in.

[Foggy]

Either you have completely different clauses to the standard agreement or the person who sent that email was making it up as they went along !

In a standard agreement income increases are treated in two main ways:

Overtime and bonus payments: Each month you take your latest agreed income. Work out 10% of this -- you keep that then split any extra 50/50 with the IVA. So say:
Agreed take home income £1700 per month. You get £300 overtime on top of that..... 10% of normal income you keep, so £170. This leaves £130, 50% of this is due to the IVA, so you pay the IP £65 on top of your normal payment.

Permanent pay rises: Usually you keep all the extra until the next review. Some IPs will leave this until the usual annual review, some will conduct an interim review. In your case, with a new arrival, all of your expenses will increase anyway, so a new review will be needed. After a review your IVA payment can only increase by 50% of the nett increase in income ( that's after allowing for the extra expenses).

But .... your clauses may be different. Who are you with ? Does the front of your agreement say "Protocol Compliant" or similar ? Have a read of your conditions in your proposal.

[Steve1993]

Thanks for your reply. I’m with step change and I’m just so confused by it all now. I was unaware that it could go up so high!

[luluj]

Post your terms and conditions on here so we can help you to unpick it all .... as foggy has explained you should get to keep 50% of any increase.