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What happens if my income increases during my IVA?

By Uday Tank,

Trying to predict your income for the next five years is never easy (if not impossible) and yet that’s exactly what you’ll be expected to do if you decide to enter into an Individual Voluntary Agreement (IVA).

But what might happen if your financial situation changes for the better during your IVA? And what are the potential implications?

How your IVA will be reviewed

Once your IVA has been accepted by your creditors, your chosen insolvency practitioner will be responsible for keeping it under review. He or she will also ask you to stay in touch and inform them should your circumstances change, for better or worse. It’ll also be reviewed in more detail every 12 months.

What if I get a pay rise?

If you get a pay rise while you’re in your IVA then that’s clearly good news for all concerned and your insolvency practitioner might well suggest you increase your monthly repayments to reflect this.

Remember, an IVA is a legally binding agreement made between both you and your creditors. While the actual terms and conditions relating to IVAs can vary slightly, there may well be a clause in there which stipulates you must increase your monthly payments if your financial situation means that you’re able to. The same applies if you come into any substantial amount of money – for example, due to inheritance, a successful compensation claim or other means. You can’t simply keep the money and not mention it to your insolvency practitioner. He or she will need the full details of your finances and will then have to consider whether your IVA needs to be changed accordingly.

I’ve had a pay rise but it’s only temporary – does that matter?

You might have had a temporary pay rise for a number of reasons – perhaps through working extended hours or even covering a colleague’s post for a set period of time, maybe while they’re on maternity or long-term sick leave. Either way, it’s important you disclose this change as soon as possible. In some cases, you might only have to pay a very small percentage of your additional income and if it’s temporary then it might not have to be incorporated at all but honesty is definitely the best policy.

Purpose of the IVA

Remember, the whole purpose of an IVA company is to try and come as close as you possibly can to repaying the monies you owe to your creditors. They’re not intended to be a means of avoiding your responsibilities, nor are they intended to force your creditors into accepting less than the actual amount owed.

Consequently, if you’re in any doubt whatsoever about any potential changes to your income then be sure to raise them as soon as you can. The last thing you want is for your IVA to fail or for your creditors to think that you’re not fully committed to repaying them, since that ultimately defeats the whole object of an IVA in the first place.

Uday Tank has been working writing for clients for over four years. His educational background in family science and journalism has given him a broad base from which to approach many topics. He especially enjoys writing content after researching and analyzing different resources

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