I am in an IVA but can I work for myself?
There are no restrictions to stop you from becoming self-employed whilst you're in an IVA.
But, the truth is, financial stability is the bedrock of all IVAs and making changes to your income could cause you to experience problems in maitaining your IVA payments.
So if you're considering becoming self-employed midway through your IVA, you'd be well advised to prepare well.
Preparation Is Key
Firstly, make sure you're being realistic with your expectations.
Also, make sure you're familiar with the responsibilities related to running your own business, especially those obligations relating to managing your own tax affairs.
Do as much research as possible on the market place your business will be operating in. Making sure you understand it thoroughly could save you from making some very expensive mistakes.
Make accurate cash flow projections and familiarise yourself with the level of turnover and profit margin you'll need to generate in order to maintain your current level of income.
And finally, you should keep your IVA Supervisor informed of any changes to your circumstances.
Potential payment problems
Communication with your supervisory team is extremely important, particularly when you may need their support if things don't go as you'd hoped.
If your change in circumstances reduces your income to the point where you can no longer maintain your IVA payments, your IVA will be in danger of failing.
If you do hit payment problems you should inform your supervisory team as soon as you can.
They have some discretionary options which they can use to assist you with any temporary issues and, hopefully, give you enough time to get your payments back on track.
No credit available
Starting a business can be challenging at the best of times, but another concern you might need to give some thought to relates to obtaining credit through trading accounts.
You'll need permission from your IVA supervisor if you wish to open any lines of credit with suppliers or trade outlets.
Under the terms and conditions of your IVA, you shouldn't seek any credit, but obtaining credit above £500 without the permission of your insolvency practitioner would be considered a breach of the arrangement.
This means, unless you can get permission to obtain credit from your insolvency practitioner, your business will need to be self-financing, or need to be growth organically.
Becoming successful
If you do take the plunge and start your own business, which later becomes successful, there's another consideration to be had.
Your IVA contributions are based on affordability.
So, if your income grows as a result of your success, your supervisory team will need to reassess your budget to see whether your IVA payments need to be increased.
Understanding your obligations under the terms of your IVA will help you ensure you keep your IVA on track and give your IVA the best chance of reaching a successful outcome.
For more information on any the points raised here, you should speak to your supervisory team.
