Increase in Income after Lump Sum IVA

After you have completed a Lump Sum Payment IVA any increase in income is yours to keep. You are no longer bound by the terms of the Arrangement.

Jump to article contents:

• What is a Lump Sum Payment IVA?
• What if you get an increase in income after it is completed?
• Can you use the solution before your income rises?
• Can you keep a windfall received after a Lump Sum IVA?

What is a Lump Sum Payment IVA?

An IVA usually requires monthly payments which last 5-6 years. During this time you are bound by various rules. These include paying more if your wages or other income rises.

A Lump Sum Payment IVA is different. It is based on paying a single cash amount. Once this has been handed over the Arrangement can be completed straight away.

After it is completed no further payments are required. Any included debt that was not paid is written off and creditors are no longer allowed to chase for payments

The cash required for a Lump Sum IVA does not have to be paid immediately. It may be paid later. However the Arrangement gives you immediate protection from your creditors.

What if you get an Increase in Income after a Lump Sum IVA?

If you have an increase in income after a Lump Sum Payment IVA the extra money you earn is yours to keep. As long as you have received your completion certificate you do not have to inform anyone of the change.

There is nothing to stop you getting a better paid job or starting to work if you were previously unemployed. You will not have to pay any more towards the debts you included in the Arrangement.

Where you start a Lump Sum IVA but do not hand over the cash immediately you may have to make monthly payments in the mean time. If so and your income increases during this time your payments may also rise.

If your income rises after getting your completion certificate a Lump Sum IVA cannot be re-opened. The debts included have to be written off even if you can now afford to pay them.

Can you use a Lump Sum IVA before your Income Rises?

You may be expecting an increase in income. Perhaps you are due for a promotion at work or know that you plan to start looking for a better paid job.

There is nothing to stop you using a Lump Sum Payment IVA in these circumstances. In fact it may be to your advantage. After the Arrangement is completed any future rise in your income will be protected.

You just have to make sure that the agreed lump sum is handed over and you have received your completion certificate before the you get the increase.

If your income rises before receiving your completion certificate you are obliged to tell your IP. You may then have to start making monthly payments until the lump sum is paid.

Can you keep a Windfall received after a Lump Sum IVA?

A windfall is the receipt of an unexpected cash sum. It could be a lottery win, inheritance payment or compensation. If you receive such a payment during an IVA it normally has to be paid into the Arrangement.

As with an increase in income most windfalls received after the Arrangement is completed are yours to keep. In other words as soon as your Lump Sum Payment IVA is completed you can keep subsequent windfalls your receive.

This type of IVA could therefore be very useful if you know that you might receive a windfall in the near future. For example if you believe you will receive inheritance in the next year or two using a Full and Final Arrangement can ensure you keep the money.

Following the Court ruling on Green v Wright in March 17 PPI compensation received after an IVA is completed will normally still have to be paid to your old IVA Company.