Struggling to pay - individual voluntary arrangements
Tell your insolvency practitioner straight away if your circumstances change and you can't make your Individual Voluntary Arrangement (IVA) payments - they might be able to help. The help they can give depends on whether your difficulties are short-term or long-term.
Coronavirus - extra help you can get
You could get extra help from your insolvency practitioner if you’re struggling to pay your IVA because of coronavirus. You can ask for extra help until 20 April 2021.
If you tell them you’re struggling, they can decide to do one or all of the following:
reduce your payments by up to 50% without asking your creditors
stop you from having to remortgage your home - they might agree to extend your IVA by 12 months instead
stop taking your overtime pay into account if you’re a key worker
delay taking any of your redundancy pay if you’re made redundant
- give you a 6 month payment break - this is on top of the 9 months of payment breaks you’re allowed as part of your IVA
If you take any payment breaks, you’ll need to make up the payments you missed before your IVA ends. You can ask your insolvency practitioner to extend your IVA to give you more time. If they agree to do this, they’ll usually extend it for a maximum of 12 months.
If you’ve broken the terms of your IVA because of coronavirus, your insolvency practitioner might agree not to end it.
If you've already missed a payment
Contact your insolvency practitioner straight away - otherwise your IVA may be at risk. This means your IVA could end and you'll have to find another way to pay your debts.
If you're in short-term financial difficulty
Your insolvency practitioner might agree to give you a payment break for a few months if you've got a temporary emergency that means you can't make your payments. This could be, for example, if your fridge has broken or your monthly income is less than normal.
To get a payment break, your IVA has to have been made under the IVA protocol - read more about the IVA protocol. If your IVA wasn't made under the protocol, check your paperwork to see if the IVA can be changed to accept lower payments if your circumstances change.
You'll have to provide evidence to your insolvency practitioner about your situation - for example, bank statements, benefits letters or a receipt for an emergency item you had to buy.
If you get a payment break
The length of your IVA will be extended to cover the payments you missed.
The length of payment break you can get depends on when your IVA was set up.
|When your IVA was set up||Maximum length of payment break|
|After 1 January 2016||9 months|
|1 July 2012 - 31 December 2016||Up to 9 months - 6 months straight away plus an extra 3 months to take at the same time or later on if you need it|
|Before 1 July 2012||6 months|
If you need a longer payment break or another break later on, your insolvency practitioner might be able to give it to you. They'd have to get agreement from your creditors.
If you're in long-term financial difficulty
If your financial situation has got worse and is unlikely to improve, talk to your insolvency practitioner. You might be able to either:
- end your IVA early
- reduce your monthly IVA payments
If you want to end your IVA early, you’ll need to show why you can’t afford to pay it any more - for example, if you can’t work because of sickness or disability. If your creditors agree, your remaining debt will be ‘written off’ - this means you don’t have to pay it.
The rules about when you can reduce your payments depends on whether your IVA was made under the IVA protocol - read more about the IVA protocol. Most IVAs are made under the protocol but if you're not sure, ask your insolvency practitioner.
If your payments are reduced, the length of your IVA might be extended.
If your IVA was made under the protocol
Your insolvency practitioner can reduce your monthly payments by up to 15% without having to ask your creditors.
If you want to reduce your payments by more than 15% your insolvency practitioner will have to get permission from your creditors - they might charge you a fee for this. If the creditors don't agree to the change and you can't keep up your payments, your IVA will end and you'll have to find another way to pay your debts.
If your IVA wasn't made under the IVA protocol
Check your IVA paperwork to see if it says whether the IVA can be changed to accept lower payments if your circumstances change.
If it doesn't, and you can't keep up your payments, your IVA will end and you'll have to find another way to pay your debts.