If you go on maternity leave during an IVA your income is likely to fall. As a result your payments may have to be suspended until you get back to work.
- Can IVA Payments be suspended during Maternity Leave?
- What happens when you return to work?
- Options if you do not return to work
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Can IVA Payments be suspended during Maternity Leave?
If you become pregnant and go on maternity leave your household income will normally go down. When this happens it is likely that you will no longer be able to afford your ongoing IVA payments.
This does not mean the Arrangement is at risk of failing. However you will need to speak to your IVA company and agree what to do. The most common solution is take a payment break. In other words stop your payments altogether until you get back to work.
If you can still afford to make ongoing payments an alternative might be to continue doing so but at a reduced rate. Your IVA Company would have to agree this with your creditors. It would normally go hand in hand with an extension of the Arrangement.
While you are on maternity leave you could take a Payment Break from your IVA. If you do the payments you miss will be added at the end.
What happens to your IVA Payments after you return to Work?
Once you return to work after your maternity leave your payment break will stop. In theory you then just start making your normal monthly payments again. However in reality it is unlikely you will be able to afford this.
The reason is that both your income and living expenses will have changed. Your wages may have fallen because you have gone back to work part time. There will also be changes to any benefits you receive. Your expenses are likely to have increased with a new baby to clothe and feed and also the possibility of additional child care to pay for.
Given this your IVA Company will have to carry out a full review of your income and expenses budget before your payments can restart. If your disposable income has fallen reduced payments must be agreed with your creditors.
If you need to reduce your IVA payments after maternity leave the length of your Arrangement will also be extended. This could be by 12 months or more depending on the reduction.
Options if you do not go back to work after Maternity Leave
At the end of your maternity leave you may decide that you will not or cannot go back to work. Alternatively you may return to work but your income is too low to be able to afford ongoing IVA payments.
In these circumstances your IVA Company might be able to complete your Arrangement based on the payments you have already made. However this is unlikely unless you were already nearly at the end of the Arrangement before you had your baby.
Alternatively you could look to settle the agreement early. To achieve this you or a third party will need to come up with a one off lump sum payment. However the alternative to this could be that the Arrangement will fail.
If you are unable to continue paying your IVA after taking maternity leave and it cannot be settled early it may fail. You would then have to consider a different solution for dealing with the outstanding debt.