Where the debtor enjoys a substantial increase in income arising from overtime, bonus payment or commission payment which was not included in the original calculation of disposable income, there is an obligation to disclose this fact to the supervisor of the IVA and to adjust the monthly contributions appropriately.
Most IVA proposals anticipate possible increases in income and provide a method for calculating the consequent effect on the debtor’s contributions to his or her IVA. Debtors are not normally required to contribute the full amount of such additional disposable income to their IVA. A standard requirement is that the debtor is required to disclose to his or her supervisor any such changes to income within fourteen of receipt, where the increase exceeds 10% of normal take home pay. Within a further fourteen days of disclosure, the debtor is required to pay to his or her supervisor 50% of any additional income (over and above the first 10%).
This increased income is regarded as exceptional and does not include routine overtime payments already included in the income calculations of the original IVA proposal. Failure to disclose such exceptional income is usually deemed to be a breach of terms of the IVA and has to be reported to creditors in the next annual review, together with proposal as to how the breach is to be rectified, which may be via an extension of up to six months in the term of the IVA.
Proofs of income for IVAs which are based on income from employment are usually provided to the supervisor by means of the debtor’s P60 and pay-slips which are furnished on a regular basis.