When you propose an IVA to your creditors, you are proposing to pay a certain amount to them over a set period of time, but of course no one can tell for sure what’s going to happen during that period. IVAs are fairly flexible for this reason, as there is a chance that your finances will either improve or deteriorate further once the IVA is ongoing.
Your Insolvency Practitioner (IP) will be mainly responsible for the administration of your IVA once if has been set up. If you have any issues or questions regarding the IVA during this time, you should therefore contact them as soon as possible.
Payment changes
Your IP will keep an eye on your finances as the IVA is progressing, and may propose making changes to it for a number of different reasons. If your finances should improve during the IVA, your IP may indeed suggest that you increase the payments that you are making towards it.
In circumstances where your IP decides that you should make a change to the IVA payments, they will always talk this through with you first. The IP will not make any changes without doing this and so you do not need to worry about any unexpected alterations to your IVA contract.
Legal Contract
An IVA is a legal contract. It binds both you and your creditors legally to the proposal that you put forward and they accepted. On the one hand this means that you are protected from legal action from the creditors regarding the debts while the IVA is in place. Also, once the IVA is complete, and providing you kept to your side of the deal, they will be obliged to consider your debts settled, even in cases where the result of the IVA is that you have paid back only a portion of what you owed, which is often what happens.
The legal aspect of an IVA gives you a level of protection, but it also gives you an equal level of responsibility, i.e. that you need to make the payments.
Paying back
The principle of an IVA is that you cannot pay the debts as required by your current agreements, and so are proposing to make an alternative program of payments instead. The IVA will be tailor made to suit your financial circumstances at the time of proposing it. The reason creditors are inclined to accept IVAs is that the alternative is normally bankruptcy, which typically results in them seeing even less of their borrowing returned.
Naturally, it is often the case that your circumstances will change considerably after the IVA has been initially set up. IPs have the responsibility of monitoring the situation, and this is why they may suggest amendments.
Your creditors are accepting your IVA payments on the basis that you are paying them as much of the debts owed to them as you can reasonably manage. If follows from this that if your finances improve, your IP has to make alterations to your payments accordingly. IVAs are not a way to avoid paying back your total debts, but to try and come as close as you can to paying back what you owe.