If you are currently in an IVA (Individual Voluntary Arrangement) and you are struggling to make repayments, due to Covid-19, there is help at hand.
You can request a 3 month break from paying your IVA and also a reduction in future payments of 25%. This could give you a welcome break in a very uncertain time. It would also allow you to prevent your IVA from failing, which could be catastrophic to your financial situation in the long term. This will cause a knock on effect to creditors who have agreed a set schedule of payments, such as local Councils who will be expecting to receive money from council tax arrears.
Not all IVA companies offered flexibility at the beginning of the Coronavirus epidemic but now the Government has stepped in and made sweeping changes to the laws surrounding Individual Voluntary Arrangements.
It is important to note that IVA companies are not offering this automatically and you will have to call and discuss it with your IVA company. The repayment break will work in a similar way to the mortgage payment break. No money is actually saved, it is a break in time only and any balances will just be added on to the end of the IVA. This is particularly concerning to some customers as they will have their IVA extended beyond the initial agreed 5 years (60 months). The Government have also said that an IVA will not be extended for more than 12 months, under the new laws.
These new measures will stay in place until a minimum of October 2020, when they will be reviewed again (and potentially extended further).
If you have received a “windfall” due to redundancy for example, your IVA company will most likely use this money towards paying off your debt/their fees. This can be particularly concerning for some as they may have planned to use this cash towards foods and other essential items. If you have been made redundant recently, you should check to see what benefits you are entitled to. The Government have a free tool which allows you to check your eligibility. You can access it by clicking here.
If you are in an IVA and you still have debt collectors, bailiffs and creditors contacting you directly, it is important that you point them towards your Insolvency Practitioners office. The reason you pay the fees for your IVA is so they will deal with all calls, visits and text messages on your behalf.
If you have any queries about any existing IVA’s, you should direct these straight to your IVA company – who should be happy to help.
I am very familiar with The Civil Enforcement Association and the High Court Enforcement Officers Association and I have written extensively on Financial Services matters.
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