Will my IVA be affected if I change my job?
No, your IVA will not be automatically affected if you change your job.
Your IVA's success isn't dependent on you keeping the same occupation for the duration of your IVA, but it is dependent on you being able to keep up with your IVA payments.
So, changing your job isn't the issue but, rather, the effect a change in job will have on your income that matters.
Reassessment Of Income
When your IVA began, your IVA provider assessed your monthly finances to establish how much you could afford to pay into your IVA.
So, a change in income will mean that your IVA provider will need to reassess your new level of affordability.
Increase in income
If your new job comes with a payrise, there is a good chance that the amount you pay into your IVA will also rise.
As your affordability rises, so will your IVA payments.
In simple terms, the more you can afford to pay back during the IVA, the less your creditors will have to write-off at the end - which is all part of the agreement you have.
The budget reassessment will take note of any increases in expenditure that you've incurred as a result of the change in jobs. Any increases to commuting costs, or other work related expenses will be taken into account as part of the reassessment.
These changes will then be used to offset some of your new income, lessening the potential increase.
Creditors will then expect your IVA contributions to increase by 50% of the net increase to your affordability.
For example, if your IVA was previously £200 per month and, after your reassessmennt you can now afford £300 per month, your new IVA payments would be £250 per month.
Decrease in income
When a new job returns a lower income, your financial reassessment will determine whether you still have sufficient financial resource necessary to maintain your IVA payments.
If your affordability has fallen slightly as a result of your change in circumstances, help may be at hand.
Your Insolvency Practitioner has discretion to provide a 15% reduction to your IVA payments without the need to seek creditor approval.
As a result, a relatively small reduction to your income might not cause a problem for the IVA.
However, when a larger reduction is needed, your Insolvency Practitioner will be required to call a Variation Meeting to seek creditors' approval for the reduction.
Although the outcome to a Variation Meeting is never guaranteed, in the main, creditors tend to be receptive.
But be aware that creditors can request an extention to your IVA's repayment term if they feel the reduction you seek causes their expected returns to fall too low.
If a new payment agreement can't be reached and your IVA payments are no longer affordable, then your IVA will be destined to fail.
Keeping to your IVA payment schedule
Under the terms of your IVA, your IVA provider will expect you to maintain your payments on schedule and without any interuptions.
However, they do have the ability to provide a temporary payment break when there's a good reason - such as a change to your monthly pay day or the frequency at which you get paid.
Either of these changes are likely to cause problems to your cash flow, so having an open conversation with your IVA provider could make the transition to a new job a lot easier for you.
Communication is key
It's worth noting that whenever you have a serious change to your personal circumstances, such as a change in jobs, it's best to notify your IVA provider, so they can provide their support if and when you need it.
Experience tells us that the most important thing you can do is to maintain good communications with your Insolvecy Practitioner and your supervisory team.
Keeping your IVA Spervisor updated of any changes in circumstances will give your IVA the best chance of reaching a successful outcome.
