You are not allowed to hide money from your IVA company. You should disclose all your income both when you are setting up the Arrangement and if anything changes during it.
Included in this article:
- If you hide money will your IVA company find out?
- Can you hide extra earnings or a windfall like inheritance?
- Will your IVA fail if you hide money?
- Could you go to court or be made bankrupt?
If you hide money will your IVA company find out?
It is very difficult to hide money from your IVA company during the application process. You can’t easily withhold details about your income because the information you provide will be checked.
During the application process, you will normally have to prove your income by providing copies of your last three months bank statements and wage slips. You may also be asked for copies of benefits statements.
If you are self employed you will have to provide previous tax returns and a business income and expenses forecast.
The information in these documents will be reviewed to ensure that it tallies with the figures you have provided. If there are differences, these will be identified and you will be asked about them.
Hiding money from your IVA company is not allowed. You must disclose all of your income to ensure that your payments are correctly calculated. You must always pay as much as you can towards your debt.
Can you hide extra earnings or a windfall like inheritance?
Where your income goes up during an IVA, your payments are likely to increase. If you earn overtime, 50% of it must be paid into the Arrangement. If you get a windfall such as an inheritance payment, you will have to hand it all over.
Because of this, you might be tempted not to tell your IVA company about any extra money you receive. Could you stay quite and hope they don’t notice? The answer is no. If you do hide money in this way, they will almost certainly find out eventually.
This is because at the end of each year you will be required to undertake an annual review of your circumstances.
As part of the review, you will have to provide wage slips and bank statements. Most IVA companies will ask for the last 12 months worth. They will then spot any additional money you have coming in.
Before you start your IVA, make sure you understand that the monthly payment you sign up to is not fixed. It will increase if your income goes up.
Will your IVA fail if you hide money?
Not telling your IVA company about a windfall or any extra money you have coming in is seen as a breach of the agreement. This means if you hide money, it could result in them failing the Arrangement.
If the amount of money you have hidden is relatively small or you have made a genuine mistake, your IVA may not fail. You might be given the opportunity to continue with the Arrangement as long as you increase your payment from now on.
You will also have to make up any arrears based on the increased payments that you missed. These will often have to be paid by putting up your payment slightly more. Where this is not possible, you might be allowed to pay them by adding additional payments to the end of the agreement.
Where the amount you have hidden is significant or impossible to make up, your IVA company may decide that they simply can’t allow the agreement to continue. In this situation, they will have no choice but to fail it.
If your IVA fails, you will need to find a new solution to deal with your debt. Some or all of the money you have already paid will be kept by your IVA company to cover their fees. This means the amount you owe may be similar to when you started.
Could you go to court or be made bankrupt?
It is extremely unlikely that you will be taken to court or made bankrupt if you hide money from your IVA.
In almost all cases, the worse that will happen is your IVA company will terminate the Arrangement and it will fail. As a result, you will simply be left to manage your debt from then on in whatever way you chose.
Your IVA company usually has no authority to take you to Court or make you bankrupt. Any such action would have to be taken by your creditors. However they are extremely unlikely to make you bankrupt. The main reason for this is that it usually means they would never collect the money they are owed.
If your IVA fails, the most likely outcome is that your creditors will simply restart their collections action against you. It is then up to you to decide on the best way to deal with the problem. You could start a new IVA or choose a different solution such as a debt management plan. You might even decide to go bankrupt yourself, but this is your decision.
Could you go to prison if you hide money from your IVA? No. This is total rubbish. Non disclosure of your income in an IVA is purely a civil matter. It will never result in you going to prison.
IVA at risk of failure or already terminated? Give us a call (0800 011 4712) or complete the form below for advice about your options. Its free and confidential.