To offer an IVA to creditors, you must be insolvent and at the same time afford to make contributions to the IVA to settle your debts and to pay the administrative costs of the arrangement.
If you are pregnant, then your capacity to make and sustain contributions to an IVA is likely to be affected by your fluctuating financial circumstances. Although in some cases such contributions may consist of a lump sum – as for example the proceeds of sale of a property or equity released via re-mortgage or moneys provided by a family member – generally payments into an IVA will come from and consist wholly and solely of regular disposable income.
Financial fluctuations affect both income and expenditure. Assuming maternity leave of nine months is taken then weekly maternity pay for the first six weeks consists of 90% of the pregnant employee’s average gross income, say £X per week. The average gross income is that earned in the eight weeks prior to commencement of maternity leave. For the remaining thirty three weeks of maternity leave, the weekly gross income is the lesser of £X or £123. Note that these figures are gross and are subject to tax and national insurance deductions. Although some employers provide attractive alternative schemes relating to maternity leave, the norm is as outlined above.
On the expenditure side, there are also fluctuations. In the first instance, there may be a right to receive tax credits or an increase in existing tax credits. These should be applied for immediately there is any reduction in income. Tax credits may be paid retrospectively to the time the claim is made so it’s important to claim right away. Child benefit is payable once the child is born so it is important to claim as soon as practicable. Other expenses may increase or reduce. For example, the cost of foodstuffs will increase as there is another mouth to feed and heating costs are likely to go up. On the other hand there may be a temporary reduction in the cost of transport to work. When the period of maternity leave is over, new costs may kick in such as the costs of a crèche or other childcare, if the mother returns to work. However, to compensate for this income is likely to increase again.
An IVA can take all of these fluctuating financial circumstances into account. Monthly contributions go up or down as each of the main phases of the pregnancy and birth occur and as disposable income goes down and up. It would not be unusual for the IVA proposal to include three or more statements of the debtor’s income and expenditure, reflecting the debtor’s fluctuating financial circumstances at various times over the life of the IVA.
If you are in an IVA already when you become pregnant, don’t panic. Inform your supervisor immediately you know so that your IVA can be adapted to your changing circumstances and properly supervised. It may be that your supervisor will authorize a temporary payment break or reduction in payments or otherwise seek to vary the terms of your IVA by agreeing variation proposals with your creditors. Although creditors have the final say, pregnancy should not be a barrier to a successful conclusion of your arrangement.