This page contains information about debt solutions available in England, Wales and Northern Ireland. Debt advice in Scotland involves similar but different solutions. Before considering an IVA as a debt solution, you must make sure you fully understand the risks involved. Please visit our website for more information.
The news is full of stories about changes to the benefits system this year. It can be quite hard to find reliable information about what the changes will mean in practice.
If you’re on an IVA then it can be even more worrying, as changes to your income may make it harder to keep the IVA going. We’ve already covered details of the benefit changes coming in 2013 but what happens if you’re on an IVA and are affected by these?
What do I do if I’m told my benefits will reduce?
While not everyone receiving benefits will lose out as a result of the changes, there are many people who’ll see their incomes fall. If you’re on an IVA then it’s important to keep your supervisor up to date of any significant changes to your finances.
What if I can’t afford to maintain my IVA payments?
It is generally best to try to keep up with your IVA instalments wherever you possibly can. However, if your income has dropped and your payments are unaffordable it can be possible (in some circumstances) to change an IVA. Your supervisor will be able to tell you more about this.
If you want to make a significant change to an IVA then your supervisor may have to apply for a variation to your IVA. This means that they will call another creditors meeting, like the one held to get your IVA approved at the start. At this meeting the creditors will have the opportunity to vote on whether they will accept the reduced payments they’re being offered.
What happens if the creditors do not accept the reduction in payments?
Creditors are often willing to accept requests to vary an IVA but do not have to agree to this. If your variation is rejected then it’s time to make a tough decision: you can continue your IVA at the previously agreed payments, or you could allow your IVA to fail.
Clearly this isn’t an easy decision and should only be taken with the help of your IVA case worker. If possible, it’s likely to be better to keep your IVA going but this may require cutting back on other spending, which isn’t always possible.
When will benefits changes happen?
There are a lot of benefits changes coming up, so there’s not straightforward answer to this question. Here are the details as they stand at the moment:
Council tax benefit – The current system of council tax benefit will be abolished in April and be replaced by a regional system administered by local councils in England, and the devolved governments in the rest of the UK. This change will lead to a variety of different systems and the impact will vary depending on your area.
Universal Credit – Read more details about Universal Credit. Existing benefit claimants will be slowly moved onto the Universal Credit system from April 2014.
Benefits cap – A total weekly cap on benefits of £500 will be trialed in some selected London boroughs from April this year and brought in for the whole country in the summer.
DLA – this benefit will be phased out and replaced by Personal Independence Payment between October 2013 and 2017.
“Bedroom tax” (under occupancy charge) – This is the change in law that will mean those with unused bedrooms will receive a reduction in housing benefit – the so-called “bedroom tax”. This change started on April 1. Those affected will have heard more about this by now or will be hearing very shortly.