An IVA can be a great solution if you are consistently struggling to keep on top of your contractual payments and household bills, however life likes to throw us curve balls every now and again with an emergency, or two, completely out of the blue.
With this in mind, signing up to a five year legally binding agreement can be a daunting prospect, but the process is not quite as rigid as you may think with a payment break option for worthy circumstances.
Under what circumstances could I have a payment break from my IVA?
First and foremost, it has to a legitimate reason, and by legitimate, I mean an emergency.
Birthday’s, Christmas and school uniforms will not be considered an emergency by the supervisor, it may sound harsh but when creating your proposal your the company which arranged it would have ensured they gave you as much of a living allowance as possible in line with the StepChange guidelines to make sure you have plenty of room for manoeuvre in your budget for such occasions.
The process should be used as an education in the art of budgeting as much as anything and your supervisor will expect you to make the effort. Any payment break authorised by your supervisor will ultimately have to be added onto the end of the IVA and your creditors will have to accept getting paid late essentially.
When you are writing off a fair bit of debt and freezing any interest being added it is worth that effort when you get to walk away debt free to start a new financial life at the end of it.
You won’t be offered any more than nine payment breaks throughout the course of the payments, but it’s not all doom and gloom as you can add a catch-up arrangement if an occasion has stretched your budget too far and you are unable to make your monthly payment. You can also offer to increase your payments a bit for a few months to pay a legitimate payment break back and catch up your payment plan to bring it back on track.
Things you could request a payment break for are:
- You need to replace an essential household appliance such as an oven, washing machine or fridge-freezer.
- You have an excessive car repair cost. Bear in mind if it is minor your supervisor will ask why you cannot use your spares and servicing allowance.
- You need to travel for a family funeral.
- One of your creditors has unexpectedly placed an attachment on your earnings.
- You need to pay a fine.
- A genuine emergency household repair. Redecorating is not an emergency.
Any repair or fine related cost would require adequate proof for your supervisor to consider it, so make sure you have the relevant documentation before calling the company who arranged it.
How to stretch your budget further in an IVA
When you have arranged a payment process and you are looking to maximise your budget you must look at things you can control. Whilst your council tax bill is in the hands of government and our TV license is a charge enforceable by law, our food and household bills are most certainly there to be cut with minimal effort.
Check out our guides and cutting down essential household bills to make your budget stretch that extra bit further.