Recently published figures estimate that the cost of rearing a child from birth to twenty one years of age can be up to £200,000. When someone in an IVA becomes pregnant the prospect of trying to sustain the IVA during the pregnancy and especially after the birth of the baby can be a daunting one.
The undoubted joy of having a baby has to be tempered with the reality that financial pressures will increase. Nevertheless, many debtors in IVAs have successfully overcome the challenges posed in these circumstances.
The first thing to realize is that your IVA will not necessarily fail just because you will be having a baby. Obviously, your financial circumstances will change – several times – during your pregnancy, at the time of the birth, in the months after the birth and finally if and when you return to work. For a start, your income will normally decrease when you stop working although this of course depends on the terms of your employment. Your contract may provide for your full salary or a significant percentage of it to be paid while you are on maternity leave. However, for most people, this will not be the case.
Assuming you take maternity leave of nine months then your weekly maternity pay for the first six weeks of absence consists of 90% of your average gross income. Let us say that the amount you get is £X gross per week. Your average gross income is what you earned in the eight weeks before commencing your maternity leave. For the remaining thirty three weeks of maternity leave, your weekly gross income is the lesser of £X or £124.88. Note that these figures are gross and are subject to tax and national insurance deductions. As mentioned already, some employers provide attractive alternative schemes relating to maternity leave but the norm is as outlined above.
When and if you return to work then your income will usually revert to what you were earning before your maternity leave. Your income may also increase if you become entitled to claim tax credits or if you receive an increase in your existing tax credits. You should apply for these 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 also payable once your child is born so it is important to claim as soon as practicable.
Now let’s look at expenditure. Your various expenses may increase or reduce but overall your expenses will increase. For example, the cost of foodstuffs will increase as you have another mouth to feed and of course heating costs are likely to go up. On the other hand there may be a temporary reduction in the cost of transport to work. You will incur the new costs of clothing and nappies for your baby. When the period of maternity leave is over, other new costs may kick in such as the costs of a crèche or other childcare, if you return to work. If you have extended family who are willing to assist, some of these new costs can be perhaps diminished somewhat.
There is no need to panic if you find yourself pregnant. Inform the supervisor of your IVA 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 but rather a joyful and happy event bringing fulfillment to parents and siblings. To adapt an old saying – ‘where there’s new life, there’s hope’.