I am coming to the of my last year of the IVA process and to date all payments made on time. Anyway I just had feedback from my annual review that I should have paid 50% of my annual bonus (approx GBP1000). However I understood as per the comments on my IVA documentation that yes 50% should be paid but rather when the bonus exceeds 10% of my regular take home. My bonus structure is maxed at 10% so I saw no need to declare. However IP states even if it is an annual bonus it is not calculated pro rata ie annual bonus as 10% of annual salary. To me this seems very unfair as if my employers paid the same amount just monthly it would not be subject to declaration? Please help me understand whether IP miscalculated or whether I misunderstand. Many thanks.
Hi. If you get a bonus, whether annual or monthly, it is your individual monthly pay used to calculate overpayments into the IVA. So, in the month that the bonus was paid you will keep the equivalent of 10% of normal salary and pay over 50 % of the balance.
If you could convince your employer to average out the bonus and pay in monthly installments you could get to keep more, or all of it.
Clear as mud ???
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Sadly I think all the above is right I have the same issue I get a quarterly bonus and it's not calculated across the year but if I take home £2000 and my bonus is £1000 I need to pay £400 over keep the first 10% and half the rest..
Seek advice from your ip to clear it..if its any help I did not pay in 5k of ot and bonus last year and my company was forgiving and just increased my payments for the remainder of my iva to cover it
I am no expert but would like to give advice based on my own personal experience...
All of us that get an annual bonus are penalised like this, it is unfair because we get it annually instead of monthly, but that's the rules and we have to live by them
If life is what you make it, I must have been in a strange mood when I made mine
You are not correct concerned. The calculation is done in the month in which the bonus is paid, and cannot be spread across a whole year. I hardly think this is unfair if you work out how much your creditors have allowed you to write off the debts via the IVA.
It is actually extremely unfair that someone paid a bonus once a year gets treated differently to another person who is paid that bonus monthly.
The same person on the same wage recieving the same bonus annually but one paid monthly could keep it all under the 10% rule but the other paid once a year hits the 10/50/50. Hardly fair.
If you assume both people owed the same debt and were going to get the same amount of debt written off then one person is significantly at an advantage over the other due to nothing more than the way they are paid.
Not much of an incentive to someone to work harder every month who is paid an annual bonus.
Last edited by herbekj on Fri Sep 14, 2012 7:15 pm, edited 1 time in total.
Last Payment - November 2011 - Completion Certificate received 2 weeks after last payment, Removed from Insolvency Register within 4 weeks after last payment.
That is a matter for employee and employer to sort out if there is feeling of unfairness. The employee who receives the bonus monthly may always be seen to be in a more advantgageous position then the employee who has to wait all year - regardless of whether they are in an IVA or not. I personally think that the fact that an IVA allows debt write off, so long as clients can pay as much as they can afford to over a set period of time is very fair.
As to incentive to work harder - I am afraid it is each to their own to make decisions as they see fit. In bankruptcy you would hand over the lot.
The unfairness is in the IVA , nothing to do with the employee/employer.
2 people in the exact same situation with the same wage, the same debt, the same debt written off but paid bonuses differently, one is at an adavantage.
That is an anomally which should be addressed.
Last Payment - November 2011 - Completion Certificate received 2 weeks after last payment, Removed from Insolvency Register within 4 weeks after last payment.
I'm sorry Herbekj but I disagree, lines have to be drawn somewhere, it's the same with windfalls that if you gain a windfall of £499 you can keep it all but if you get £500 you have to pay over the whole lot, you could argue that is unfair but the rules are as they are, if you don't like it whether you think it fair or not, you don't have to sign an IVA proposal and can sort your own debt solution out.
Frankly I'm just grateful for a chance to have an affordable way to repay as much as I can knowing that at the end of the 5 year term a proportion of my debt is going to be written off, and I am happy to stick to the terms of the arrangement as I agreed to at the start
i agree with lem..I am due for back pay to the tune of over £1000 gross in october im not holding out much hope of keeping any of it but if i do it will be a bonus if i dont then im cloer to may be my IVA payments concluding early so in the long term im better off.
I am no expert but would like to give advice based on my own personal experience...
It is not an anomaly which should be addressed. Anyone who thinks the term is unfair does not have to sign up to take advantage of the often substantial write off of debt allowed by creditors. In my opinion the clause is therefore entirely optional and therefore I do not understand where the idea of unfairness is derived from.
At the outset of an IVA you enter it in the knowledge that you will pay a minimum agreed dividend to creditors, but pay back as much of your debt as possible.
I think it`s more than fair that I am allowed to keep 10% equal to 10% of a months wage and 50% of the remainder of any bonus I get, after all a bonus is just that...a bonus.
"When the seagulls follow the trawler, it is because they think sardines will be thrown into the sea".
If I had the benefit of a bonus pre-IVA I would not have seen any benefit from it as it would have been gobbled up, in it's entirety, in repayments. At least, now, in my IVA, with all necessities being accounted for and paid regularly, I can save (or spend) the 50+10%.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
total agree with goosed being able to keep some overtime & bonus i earn helps me out a lot with 2 kids 1 at school 1 with nursery fees..clothes x mas coming up birthdays..i know i pay 50% above the 10% but as i said before more I pay in the quicker my payments stop touch wood if I hit that magic figure
I am no expert but would like to give advice based on my own personal experience...
