Recognising the impact of the coronavirus pandemic on individuals and their finances, the Insolvency Service has issued new guidance on new and existing individual voluntary arrangements (IVAs).
Anyone that is struggling to meet their obligations under their IVA can now apply for a 3-month payment holiday and receive a 25% reduction in payments.
There’s also new guidance for anyone that’s considering an IVA during the pandemic.
If you would like to know how this new guidance affects you, speak to a member of the personal insolvency team. Call: 0800 611 8888.
If you cannot keep up with your IVA obligations, you may be able to pay less or take a short payment holiday.
Typically, when an IVA consumer can’t make IVA payments, we will need to make a variation to the existing arrangement.
This may still be required in some cases, but due to the nature of the coronavirus pandemic, many consumers will be permitted to reduce payments by up to 25% and take a payment holiday of up to 3 months without one.
This will be subject to a few conditions.
Additionally, the government says that any critical workers working during the COVID-19 pandemic will not have to report any overtime pay – meaning they will be able to keep all of this money.
There is also some new guidance on IVA consumer’s home equity and any redundancy pay that may be realised in the next six months.
An IVA can be a good insolvency solution for many people, but it does involve making some sacrifices.
In many cases, taking out an IVA is simply not the best option for people, particularly if it is for low levels of relatively short term debt. Some companies, however, have been guilty of aggressive IVA marketing, particularly at times of financial crisis.
A reliable insolvency practitioner will be able to advise you on whether an IVA is suitable for your situation.
The new government guidance also notes that government-backed financial support schemes, like the Coronavirus Job Retention Scheme and the Self-Employment Income Support Scheme can be included as income on an IVA proposal.
Additionally, if a creditor rejects a proposal relating to the coronavirus pandemic because they believe that another solution is more suitable in the short term, the creditors will need to direct the nominee to alternative advice and options.
For more information about IVAs and how the coronavirus may affect you, speak to a member of the personal insolvency team. Call: 0800 611 8888.