Reduced Pay
I hope somebody may be able to offer some advice as I am worried sick. My wife and I were accepted for an IVA last November and have made 3 payments so far. However, as I work in the car industry, my monthly pay has dropped dramatically due to dropping a shift and zero overtime. When we originally applied for the IVA I enquired about how to work out my 'normal' monthly salary as shift allowance and overtime had been included (and expected!) since I started 17 years age. I was advised to take an average of my last 6 months pay which obviously included shift allowance premium and overtime. I thought I was doing the right thing as I wanted to pay back as much as I possibly could to my creditors.
However, as I'm sure everybody knows, the car industry is now struggling, to say the least, and my pay has subsequently reduced dramatically. In hindsight I should not have included shift premium and overtime in my normal monthly salary but I genuinely thought I was doing the right thing.
Anyway, I am now in a position where I cannot afford to pay everything so I contacted my IVA company today to seek help and advice. Basically the advisor told me that the IVA had not been running long enough to request a reduction in monthly payments. He did suggest a payment break in the hope that the situation improves but, if it did not in a couple of months, and I still couldn't afford the payments, the IVA would ultimitely fail!
I would appreciate any help or advice anybody may be able to offer. Thank you.
Sorry to hear about your reduction in pay, that must be awful for both of you.
I'm hoping that one of the professionals can pick up on this and advise you.
Didn't want you to think that we were ignoring you.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Was the IVA proposed in accordance with the IVA protocol? If so your IP can reduce your payments by up to 15% without the need to revert to creditors.
This post does serve to highlight how dangerous it can be to include overtime and other additional benefits as part of basic salary - especially in today's economic climate.
I would go back to your IP and state that a variation under your changed circumstances is appropriate (mention that is advice from me Creditors are amenable to variations especially in your type of situation. A payment break might be appropriate. Are you looking for another job?
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
When I contacted my IVA company, the advisor led me to believe that I had not been in my IVA long enough to request a variation. Is there a set time that an IVA has to run before a variation can be requested?
I think that the protocol compliant IVA's (of which yours will most likely be one as it was approved post February 2008) have a clause now which says that there will be no variations for the first 24 months.
However, in certain circumstances this can be overruled, and I would do as David says and get back in touch with your IP.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Hi
This highlights the danger of including overtime and bonus's in calculating income when setting up an IVA.
It should nearly always be calculated using basic pay.
Speak with your IP and try to work out a ay forward. Under the circumstances a variation must be sought by your IP
Regards
The protocol does not include a provision that there be no variations within the 24 months. This was a modification that was introduced a couple of years ago by a few creditors, who quickly realised how barking mad it actually was and I have not seen it used for some time now.
Check the terms of your proposal and Chairman's report to see if this is covered. If not, you are free to propose a variation whenever you like!
Sorry Melanie, having seen it mentioned a fair bit on here, I thought it was part of the protocol.
I shall know for next time.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
I really wish that I had used basic pay when applying for the IVA but thought that I was doing the right thing by everyone. Also, I was advised to take an average of my previous 6 months pay by my IVA company. Hindsight is a wonderful thing!
The average is correct and is what most if not all practitioners take. Practitioners were not aware in the past of problems that are now apparent due to the recession and cut backs by employers. I am sure a solution will be available to you - speak to your IP.
Last edited by David Mond on Sun Mar 22, 2009 12:38 pm, edited 1 time in total.
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
I would rarely use an averaging basis for calculation of salary. We would generally use basic salary, as this gives as much certainty possible to the debtor and creditors. If additional monies are earned, these can be collected under the uplift provisions included in most IVA proposals.
I am somewhat in the same boat Big Ted. I was advised by my IP to include my overtime (on call) as I have got the same amount of overtime for the past 8 years or so. My overtime works out at nearly £20,000 a year and my IP said it was unlikely an IVA would be approved using my basic wage.
Of course, now the situation is that my overtime is in danger and I am dreading the day when it dries up!!!
And that is my point entirely - it is very dangerous to take account of irregular earnings when calculation disposable income. Better to err on the side of caution and be prepared to pay over more, than be over-optimistic and then face failure.
