Can IVA payments change?

An Individual Voluntary Arrangement (IVA) is a legally binding contract between you and your unsecured lenders to repay as much as you can afford every month. Once it comes to a successful conclusion, the rest of the included debt is written off.

While you're on an IVA, your payments can change, but when and by how much depends on a few things. First of all, your IVA payments are set by your Insolvency Practitioner, based on what you can realistically afford, and what your lenders will accept.

Your Insolvency Practitioner will usually review your payments with you every year in an 'annual review', or if something major changes in your finances.

Your payments might change depending on your circumstances - they might lower if you're struggling to afford the payments you first agreed to.

On the other hand, you might have had a pay rise that year, so you could increase your payments.

So you need to tell your IP if you can't afford your IVA payments - or if you can afford to pay more.

Find out more about the costs of an IVA here.

Other reasons your IVA payments could change

If you run into a short-term money problem, you might not be able to afford the IVA payments you originally agreed to. Sometimes it's possible to stop payments for a few months until things improve, and add those payments onto the end of the IVA, although this would increase the amount of time you're on the IVA.

Requesting a payment variation

Payments can go up or down after your annual review, or at other times when your finances change. If you're struggling with your IVA payments, it's important that you contact your IVA provider, because if you carry on struggling, the IVA could fail.

There might be the opportunity for an 'IVA variation' - a change to the terms of your IVA, designed to help you bring it to a successful conclusion. Note that any major change to the original terms of your IVA would have to be agreed by the lenders that own at least 75% of your debt.

Be aware that if you received some extra money while you're on your IVA, you would be expected to declare it to your Insolvency Practitioner - and you may have to put all or some of it into your IVA. On the plus side, additional payments like these can help to bring your IVA to successful completion.

Click here for more answers to questions you may have about your IVA.

By Lucy Bower.