worked out my new payments incorrectly.

[kopi]

I have just had my first annual review and my monthly payments have increased. They have worked it out by giving me the 1st 3% of my annual pay rise. After that they have taken the extra amount my pay has increased by, they have then taken the increase in expenditures off that amount and what is left is the amount my IVA payments will increase by. Now this is different to how I understood my IVA is worked out. Before my IVA started I asked more than once what happened if I had a pay rise at work, got a better paid job or took a second job and was told that i would get to keep 50% of the increase in my wages. MY IVA says that I should pay 50% of any additional income above my net monthly income at the start of my IVA. So I feel my IVA people have worked out my new payments incorrectly. Any advice please?

[jpj]

Surely your pay rise is a rise in your net income? its not additional income...its your new net income!
Many people on here take new jobs with better salaries and it is pretty standard to loose the pay rise into the IVA. (

[MelanieGiles]

If you take the wording of that IVA clause literally, your IP should only be taking 50% of any increase in your salary by way of additonal payments. If this suits you, then you should challenge your IP's decision.

However, a word of warning on this method - that only leaves you your 50% share to fund all of your increased expenditure. So I feel that a better method it to recalculate all of the income and expenditure and to then seek an increase based upon what you actually have remaining. Obviously if this is more than the 50% of the net income then this should be limited to that sum.

The spirit of proposing an IVA to creditors is that you will continue to allow creditors to share in your ongoing success, in lieu of the debts that they have agreed to write off.

[kopi]

So from what I have read if I have a pay rise then my IVA is entitled to all the increase in wages less increases in expenditure and in my case I get to keep the first 3% of my pay rise to allow for inflation.

The big question really is what happens if i get a new job with better pay? I am currently applying for a new job which would be about a GBP 4K pay rise but would involve much longer travelling to and from work and hence much longer days. Now if all of the increase in salary goes to my IVA then what is the point in me trying to get the new job? Surely it should be the case that I get 50% of the salary increase and my IVA gets 50% of my salary increase, then everyone is happy and I have an insentive to try to get a better paid job.

Guess the best thing is I talk to my IVA people about what happens if I get a better paid job!!!

[MelanieGiles]

The point of you trying to get a new job is to better your prospects in the long term and not just whilst the IVA is running, and also to enable you to repay as much as you can to creditors which was surely one of the reasons you chose an IVA over bankruptcy?

You are correct to talk to your own IP, as they have specialist knowledge of your individual case, and some IPs do interpret these clauses differently.

[kopi]

Paying as much as possible to my creditors had nothing to do with why I chose an IVA over Bankruptcy. It was basically to save the hassle of going through bankruptcy and the hassle of losing my bank account. Also it was because my IVA people always said it was far worse to go through Bankruptcy than an IVA.

Having said that they always seem to give me a different reason for why Bankruptcy was worse and when you take into account I don't own any property I do sometimes wonder if I was given bad advise and that Bankruptcy would have been better for me, especially as they now seem to have given me false information about making extra payments due to pay rises.

[Adam Davies]

Hi Kopi
This is an area that has been,and will always be,heavily debated on this forum.
I do agree that any money from a payrise,less increased expenditure,should be split 50/50.This gives the debtor an incentive to better themselves[look for promotion etc] and the creditor also benefits.
I would go back to your IP and challenge this.
Regards