IVAs and Missed Payments

Individual Voluntary Agreements (IVAs) are aimed at helping individuals with unsecured debt that have found themselves in the unfortunate position of insolvency. Debtors are able to pay a fixed monthly amount that is both reasonable and affordable for a fixed period (usually 5-6 years) and at the end of the agreement, any outstanding debt is wiped clear.

Personal Circumstances

Sometimes individuals may experience a change in circumstances, such as redundancy or an increase in bill payments that could result in difficulties paying into the IVA. In such instances, it is vital that the IVA Supervisor is contacted so any concerns can be discussed. Often, where there is a missed payment, depending on the circumstances and providing the amount can be made up, then no action will be taken. It is important to remember that most IVA agreements state that 2 missed payments are a breach of the terms and could result in a failure. At this stage, a Notice of Breach may be issued, advising of this fact.

IVA Deferral

Where there are exceptional circumstances, it may be possible for the payments to be deferred for up to 6 months. This will normally be at the discretion of the IVA supervisor, and will only be allowed once during the term of the IVA. Furthermore, the overall length of the IVA will be extended by the length of the time deferred.

IVA Variation

If payments have been missed, and the individual is unable to remedy the situation, then it is the responsibility of the IVA Supervisor to inform the Creditors and discuss the possibility of a Variation to the IVA. This will be a review of the debtor’s financial situation and it may be proposed that there is a change to the monthly payments. It is ultimately down to the Creditors to agree to this, and as they will re-coup even less of the original debt, they may refuse the amendment. Should there be a refusal to the variation, then the Creditors may ask for a Certificate of Termination to advise that the IVA has failed and the agreement is to be ended and they could also present a petition for Bankruptcy.