How to Get A Break in the IVA Program?

If you are consistently facing acute financial distress and trying hard to keep up with your contractual payments and utility bills, Individual Voluntary Arrangement is the most suitable solution. An IVA program helps you pay back a portion of your debt through a legally binding agreement between you and your creditor(s).

It’s important to know how you can enter into an IVA and what is the process involved. Here comes the need of hiring a licensed insolvency practitioner who will work out your monthly income and expenses, and the leftover amount you can payback to write off your unsecured debt.

However, remember that life can throw you curveballs any time that could turn your signed five-year agreement into a daunting prospect. Well, it’s a great solution not as a rigid process as other debt settlement plans such as Debt Relief Order and Bankruptcy since it provides a person with debt a payment breakdown option for emergency circumstances.  

Conditions to Apply for Payment Break :

Under the following circumstances, you can have a payment break from your IVA.

• First and foremost, your IVA has to be established under the IVA protocol, which is a voluntary code of practice signed by all insolvency practitioners (IP) and most of the creditors. If your IP hasn’t signed that protocol, he cannot claim a payment break from this debt management plan.
• Your IP can decrease your monthly repayments up to 15% if your IVA falls under the protocol. He doesn’t even need to ask your creditors. For more than 15% reduction, he must get permission from your creditors. But, for this, he may charge you a little fee.
• In case your creditors don’t accept your IP’s request by disagreeing to the change, your IVA will end since you cannot keep up the payments. Now, you have to find some other solution to write off your debts. Else, you may face bankruptcy. 
• Therefore, your IVA should be made under the protocol. For this you should check the paperwork is done by your insolvency practitioner to know if your IVA plan can be changed to accept lower monthly payments from the already agreed amount if your circumstances change.
• To get the repayment break, you need to provide evidence to your insolvency practitioner about your emergency situation. For instance, benefits letters, bank statements, or buying receipt of an emergency item. You can seek debt help UK from a reliable debt solution provider to confirm the extremity of your situation.
• Ensure that IVA proposal that your insolvency practitioners has prepared and presented to your creditor(s) for approval should guarantee as much of a living allowance as possible so that you can have enough budget already in hand for such unwanted occasions.  
• Any payment break as authorized by your insolvency practitioner according to IVA guidelines will be ultimately added onto the end of your IVA scheme and your creditors will essentially have to accept getting paid late.  

Here’s a few things a debtor can request a repayment break for includes, but not limited to :

• An unexpected vehicle breakdown with excessive repair cost.  
• An emergency household repair or essential replacement.
• You may need to pay some fine or travel for a family funeral.
• An unexpectedly placed attachment on your earnings by your creditor. 

Make sure it’s a legitimate reason and it means ‘an emergency situation’ that disturbed your finances such as excessive car repair cost or unexpected attachment of earnings, etc. Remember that for minor issues your insolvency practitioner may ask you to use your services allowance. So, your problem must be genuine for which your IP can put forward your case with the confidence of definite approval.   

You will be offered no more than 9 payment breaks throughout your IVA. For this, you have to talk to your IP and he will consult with your creditor about your change situation and once accepted by them your debt repayments will be adjusted accordingly.

If you are considering Individual Voluntary Agreement as a possible debt settlement solution, it is important to get free debt advice from an expert advisor, such as ours at IVA Experts UK, to determine whether or not it would be suitable to your unique situation.