Salary insurance

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marie215

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Post by marie215 » Fri May 29, 2020 4:49 am
I entered into an IVA in November 2019, following a long term period of sickness where I was unable to work full time. As a result of this extended sick leave I was only being paid for the 2 days a week I worked, rather than my usual 5 and my wages were drastically reduced. Before I entered into my IVA the company I work for applied for salary insurance to cover the days I don't work. We weren't sure at the time that the claim would be successful. I found out today that the claim was approved and has been backdated and I'm going to receive £14,000 (to be taxed of course) of backdated salary. My question is how much of this will be paid into the IVA. Do the standard 'bonus' rules of 50% apply? I asked my IP but he wasn't sure because he said it's technically not a 'bonus' because it's wages I didn't have at the time and although it's a large sum of money it's not classed as a windfall either. He's going to have to check. Just wondered if anyone on here has heard of anything similar.

Foggy

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Post by Foggy » Fri May 29, 2020 9:16 am
I would say, and this is purely a guess, that, as this payout is to make up the shortfall between the full time and the part time wage, it would be payable into the IVA up to an amount required to 'repay' the difference between the initially agreed payments and reduced payments actually made. Assuming that you did have a reduction in IVA payments due to reduced income. Additionally this sum, if paid to the IVA, should offset any extensions you might have had imposed, again due to the reduced income.

The ethos behind these payments is to put you back into a position you would have been in had the insured event not occured .... in this case you would have made full IVA payments.

If, afer this 'repayment' exercise, there is any surplus, I would argue that this should be applied to any other financial matters you might have fallen behind on, to catch up there also. Indeed, any other shortfalls should be looked at alongside the IVA, not giving preference to it.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk
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