Can I earn overtime with an IVA?

If you currently have, or are considering an Individual Voluntary Arrangement (IVA) to help deal with your debt management, then there are terms and conditions that you must adhere to in order to secure the lower monthly repayments.

Using IVAs

IVAs are a good way of protecting your home against unsecured debt creditors who would acquire charging orders against your property, even in the event of adhering to an established debt management plan. Under an IVA plan, your property can be protected.

If you qualify for an IVA, you can negotiate an IVA debt management plan with an insolvency practitioner. They will calculate how much you can afford to repay creditors each month in a single payment and distribute the funds to creditors accordingly.

How much do you pay?

Under the IVA plan, you will be paying as much as you can afford after reasonable living expenses have been deducted. It is important to keep in mind that such payments are usually not fixed. Therefore, if you had a reduction in monthly income the IVA plan would try to reduce the monthly payments to coincide with this.

The reverse is also true. If you have an income rise or regular overtime then this will be factored into the IVA calculations. This means you would effectively be paying more into the IVA if the overtime earnings warrant higher payments. This is normally 10% or above you regular income.

Any unexpected bonuses or inheritances will also be factored into the IVA plan at the 10% rate. This means the first 10% of the irregular income above your regular income will not be affected, then the remaining sum will be split 50/50 between what you would keep and what you would be expected to pay into the IVA.

Does paying extra mean finishing early?

Paying extra to the IVA each month will not necessarily mean early resolution but it may mean lighter repayments in the final stages of the agreement, depending on the terms you have agreed.

Typically, IVA plans distribute funds to multiple creditors and increased payments might fully repay one creditor early but leave the plan ongoing. A rolling creditor, such as a utility or insurance provider, cannot be resolved early as long as the policy continues. So the IVA cannot be finished early this way.

Ending the IVA plan early can only be done via lump sum payments through a third party with the expressed notion of settling the IVA. Only when all creditors are satisfied and the full fees of the insolvency practitioner has been met will the IVA be resolved.

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