I'm about to get a bonus

[Aaron_]

I'm about to be paid a bonus, which I did make my IP aware before my IVA and I was told that usually 50% of a bonus is paid in to the IVA so to keep the incentive of earning one high. It should be £2k. I have now been told that my IVA was approved with modifications that any windfall over £500 will be paid in to my IVA, but I keep the first £500. Although I was told that there were modifications thet didn't mention income would be considered a windfall...I've tried to explain to my IP that I am relying on this bonus (less the 50% that I had in my mind I was going to pay) to pay for replacing work clothes (suit, shirts and a pair of shoes) also I now have to pay for contact lenses and I will have a £300 bill for dentist treatment (not cosmetic I might add)...saving isn't an option. I'm kinda stuck and wanted to know what can be done?

I was thinking if nothing can be done through my IP, can I:-

1) Ask my employer to pay my bonus in to my personal pension plan (so that way I also avoid tax and NI) and £500 to me?
2) Ask my employer to pay me a £500 bonus now, again in 3 months and so on?

I'm not trying to avoid paying in to my IVA, but i'm disapointed I will have to pay more in 50% was fine by me and I'm quite happy to maake an additional one off payment later in the year...?

Any ideas?

[MelanieGiles]

Hi AM

You appear to be saying that the modifications submitted at the time of your creditors meeting were not really discussed with you - as you have only been made aware of the windfall provision? Is this correct - as your IP should not have accepted modifications for you without your knowledge.

I suggest that you submit a detailed listing of the additional expenditure you are now faced with to your IP, and seek permission for this to be paid out of the bonus monies. Providing your request is reasonable, that would definately get my approval if I were supervising your case. Common sense has to prevail in these circumstances, and the IP can exercise a certain amount of discretion.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Aaron]

Thanks Melanie, I was aware of the modifications, but at the same time did ask my 'account handler' about the bonus and he wrote in an email 50% would be paid, but must have been unaware of the modifications at the time. I should have really asked a more specific questions...I just assumed a windfall meant something like inheritance or winnings on the lottery or something and not income.

It's ok now, my IP has agreed that because it may not be a large difference between 50% and anything over £500 that I can just pay the 50% on this occassion.

I have another option, which is for my employer to make a lump sum payment in to my pension, which I might opt for.

[Aaron]

Oh, i'm also AM1983...setup a second account as forgot the password...not sure how to close an account down?

[neverending]

How can a bonus be classed as a windfall ??
A bonus is earned money,unlike a windfall

[MelanieGiles]

A windfall is any asset or money which was not envisaged at the date the proposal was accepted by creditors. So that is all encompassing and includes bonuses.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[neverending]

A bonus is envisaged,or are you saying that because this was known about prior to the IVA then it must be included in full ??
I understood that the usual 50% clause related to overtime AND bonus
Or is this another factor that differs from IP to IP ??

[MelanieGiles]

No - I am saying that because it is a benefit which has been created after the IVA was accepted, that it is deemed to be a windfall. This poster does not appear to have the standard 50% uplift clause, only a windfall clause - which is less helpful to the debtor as it only allows him to retain £500, but is more beneficial to creditors. So in the absence of the more common 50% uplift provision, the IP is classing the extra money quite rightly as a windfall.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[MelanieGiles]

No - I am saying that because it is a benefit which has been created after the IVA was accepted, that it is deemed to be a windfall. This poster does not appear to have the standard 50% uplift clause, only a windfall clause - which is less helpful to the debtor as it only allows him to retain £500, but is more beneficial to creditors. So in the absence of the more common 50% uplift provision, the IP is classing the extra money quite rightly as a windfall.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[neverending]

Sorry,I didn,t realise that there wasn,t the usual 50% clause relating to overtime.
Regards

[batawi3]

Please could someone clarify this for me, I am currently working a fractional post this year, and am considering going back to my full time post in September which will mean that my income will increase. I have really been tightfisted with my money recently, so the question is that when I go back to work full time and start working full time - what fraction of my money will I have to pay my IP, will it be half my annual increment for working full time?

I have also today just received a letter from them stating that I am in breach of my IVA because when I did my annual review there was an extra £15 a month from my wage slips which I did not declare (bearing in mind that I sent them my annual review documentation in January, they are just replying now to them!).

I am surprised by the tone of their letter because in my opinion they are the accountants so if they spot such an error then all they have to do is ask me to pay the difference which is £90 in this case. It has just made me really think whether an IVA is really for me because I felt this small receiving such a stern letter for a mere £15.

I am actually seriously thinking of ending the IVA and just going on a DMP with the consumer credit counselling service even if that will take longer. If I was to end the IVA would I be made bankrupt or is that discretionary. I might also consider the BR route and count my losses with the money I had already paid into the IVA for the past year. So I have been asked to explain the extra £15 within 14 days, and yet on top of that they have sent a letter to the creditors saying that I have managed the IVA properly for the past year and that my payments should not be increased. I am completely baffled. Please may someone kindly elaborate.

Regards

[MelanieGiles]

Hi again Batawi

What basis was your IVA set up on - part time work or full time? If the former, and you go back to work full time, firstly you will need to work out what additional cost you may encounter as a result of the longer hours. Your IP will then no doubt assess what additional monies you can pay - so there is no way of avoiding this really.

I agree with you regarding the £15 error. For a start this will probably make little difference to the outcome of your case, but runs the risk of damaging your relationship with your IP. Professionals must remember that you guys have lives at the other end of these IVA's, and have to live under strict budgetary discipline every single day.

Don't be put off the process by a silly letter, which is probably computer generated, and do express your displeasure to your IP if you feel strongly about it. You entered into the IVA for very good reasons, your creditors accepted your offer, and you are protected from any ongoing legal action and interest charges. This will not be the case with a DMP and you will pay for much longer.

A stiff letter to the IP saying that you do not expect to be treated as a naughty schoolgirl ought to do the trick!

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[batawi3]

Hi Melanie,

Hope you are well, again thank you so much for the fantastic work you are doing for people in our situation, you are totally fab!!! Thanks for the reassurance about the letter, it just made me feel so low and as if my life was no longer my control. I agree about the DMP, was just thinking about that in relation to having control of my own decisions. I guess it just hit home that just like that I could be made bankrupt even though I have been ensuring that I pay into the IVA on time every year. My IVA was entered into when I was working full time so when I went fractional it resulted in a drop of about £300 a month, however that coincided with monthly child support payments of £225 from my son's father which then balanced it out, so in essence if I was to go back to working full time there would be further expenses as I would have to put my baby into nursery which would result in increased expenses, plus my child tax credit would be reduced because of the extra income so I guess as long as I can show the increased costs as you highlighted Melanie my monthly increments would not be too excessive. The inflexibility of IVA's can be frustrating although they are a very good solution for people like me, in that they dont take into account some changes, for example my son's father is very erratic, he might pay the child support for about a year, then decide to stop for no apparent reason which in my situation would be detrimental. Anyway enough of me blabbing on, thanks again Melanie, I went on your website and read your history, it is very impressive, and well done, all your hard work has paid off