Losing one’s job when in an IVA can be worrying for the debtor and his or her family. If there is a real prospect of gaining new employment within a reasonable period of time, the debtor can seek to obtain the agreement of creditors to allow a payments break, sometimes also called a payments holiday or a payments freeze.
The supervisor of the IVA arranges for a Meeting of Creditors to be called to consider a variation to the IVA. Normally the payments break is for a period of six months and assuming the debtor gains employment in that time, payments resume again and the term of the IVA is extended by the same length of time as the agreed term of the payments break.
If at the end of the payments break the debtor has not obtained employment but still has a reasonable prospect of doing so, the debtor may ask the supervisor to call a further variation Meeting of Creditors to seek their agreement to extend the payments break for a further period of say six months with the term of the IVA being further extended by the length of the extended break.
If the debtor’s prospects for gaining employment are slim or non-existent the supervisor may seek the agreement of creditors to accept payments already made in full and final settlement of the IVA. While this may mean that creditors suffer a reduction in the dividend payment from the IVA, it would be pointless to seek the debtor’s bankruptcy if there were no income or assets available and no prospect of income being available in the foreseeable future. A bankruptcy petition would achieve nothing more than the needless punishment of a debtor who has acted in good faith and has done nothing wrong save losing his or her employment.