If you have lost your job it is likely you will be unable to pay your IVA. There are different things you can do to make sure the arrangement doesn’t fail.
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Lost your job? Take a payment break
An payment break allows you to suspend your IVA payments for an agreed length of time. If you have lost your job you should speak to your IVA company straight away about implementing a break.
Standard IVAs allow a payment break of up to 9 months. You can use this time to find new employment without having the pressure of having to maintain your payments. Once you are back in work you start paying again.
The months you have missed are added at the end. It is important to remember that a payment break will almost certainly extend the length of your IVA.
If you are unable to find a new job or take a big pay cut it may be impossible to restart your IVA payments. In these circumstances it could fail.
Can you pay your IVA early?
Where you can’t pay your IVA because you have lost your job, you may know someone who can offer a lump sum to pay off the arrangement. This could be anyone but is often a family member (perhaps your partner or spouse) or friend.
Under normal circumstances the amount needed to pay off an IVA is the total of the remaining payments. So if you normally pay £100/mth into your IVA and there are 3 years left, the amount required would be £3600 (36 x £100).
Where finding a new job on the same income is unlikely, you may never be in a position to restart your IVA payments. In these circumstances it might be possible to negotiate a slight reduction in the amount required to pay the arrangement early. However this will depend entirely on the attitude of your IVA company.
You are not allowed to use redundancy money to pay your IVA early. Different rules apply in these circumstances.
Stop your IVA and use a different debt solution
After you have lost your job, it may be impossible for you to find another which pays enough to allow you to restart your IVA payments. If you don’t know anyone who an pay the arrangement off early for you, it is likely to fail.
In these circumstances, your debt is likely to remain outstanding. Your creditors will eventually start chasing you for payment again. To avoid getting into this situation you will need to use a different debt solution.
If you live in rented property or are a home owner but have little or no equity in your property, the best option might be to go bankrupt. You won’t make further monthly payments towards your debts if you can’t afford to. If you do have equity in your property you might need to consider a debt management plan.
Want to discuss the options for your IVA after losing your job? Give us a call (0800 011 4712) or complete the form below.