People hide the extent of their debts from their nearest and dearest....
It’s an IVA overtime salary bonus
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, please make sure you fully understand the risks involved. Please visit our website for more information.
An IVA can be an effective solution when you’re struggling with unsecured debts.
What happens if you get a pay rise when you’re on an IVA? What happens if you get a higher paid job on an IVA? How do you deal with a bonus? What are the IVA rules about making more money?
The secret to keeping on top of an IVA is to stick to your budget and keep a close eye on any overtime, or bonuses or increases in your salary. You’ll need to share those above a certain amount with your insolvency practitioner.
Wages and IVA rules
We all love it when we get a pay rise or a bonus. Even small incremental rise can be cause for cheer; after all, as the supermarket chain says, every little helps!
Because you’re subject to an IVA you have certain responsibilities with any pay rise or bonus.
The standard terms and conditions of most IVAs will state something like:
Where you are employed, you must report any overtime, bonus, commission or similar to the Supervisor if not included in the original surplus calculation, where the sum exceeds 10% of your normal take home pay.
Disclosure to the Supervisor must be made within 14 days of receipt and 50% of the amount (over and above the 10%) shall be paid to the Supervisor within 14 days of the disclosure.
What does this really mean to my IVA?
Let’s make this simpler…you’re allowed to earn 10% more than is listed as your income in your IVA proposal.
Above that 10%, you’re allowed to keep 50% of whatever you earn on top of the first 10%. The rest has to be paid into the IVA.
What’s really important is:
If you do get a pay rise or receive overtime, commission or a bonus that takes your wages above the 10% extra threshold you should contact us or your insolvency practitioner straight away.
“What happens if I get a higher paid job on an IVA?” The same applies, contact your insolvency practitioner as soon as possible. They’ll explain what to do.
Many IVA proposals state that failure to disclose any such overtime, bonus, commission or similar by you will be considered a breach of the IVA.
A notice of breach gives you one month to pay in the additional money you’ve earned and explain why you failed to disclose it. For more information on breach see part IV of the standard conditions to your IVA.
If you are unable to pay the additional income into the IVA and supply an acceptable explanation to remedy the breach your supervisor will organise a meeting of creditors to alter the terms of your IVA.
If you do not respond to the notice of breach or you are unable to offer additional payments your IVA may be terminated.
In short: Stick to the IVA rules and keeping your insolvency practitioner up-to-date at all times.
The good part
The good part is that there is room and encouragement in your IVA to go for overtime (essentially even if you go over the 10% you still get to keep tidy amount of anything extra you earn). There is also a genuine reason to go after commission and hit your targets at work.
Creditors have agreed to write off some of your debt but you won’t be punished if you do overtime, work harder, or try your best.
Just remember to tell your IVA caseworker if you get a wage packet that’s more than 10% larger.