One of the great concerns for people who are considering entering into an Individual Voluntary Arrangement (IVA) is what might happen if they lose their job and are unable to make their monthly contributions to their IVA.
To cease making payments and accruing arrears of three months (in some cases two months) is generally deemed to be a breach of the terms of the IVA.
However, just because an IVA is in default doesn’t mean that it has to fail. First thing to do is to contact your Insolvency Practitioner (IP) who is supervising your IVA. Inform them of the loss of your employment and of your intentions and efforts to secure a new job. Provide a realistic assessment of your prospects in this regard. Consider the need and practicality of obtaining employment in your current locality. If you may need to move to get a job, can you do so and are you prepared to do so?
If you are struggling, ask for a payment break
Finally, why not ask your IP to seek the agreement of your creditors for a payment break? This will give you time to seek work without having to worry about your IVA failing through no fault of your own. There is no reason why creditors should refuse such a reasonable request and the payment break could last as long as one year.
Obviously when you do secure employment, you will have to take steps to remedy the breach which has occurred. That might be done by increasing the amount of your monthly contributions or by extending the term of your IVA or perhaps by some combination of these. A good IP will already be aware of all these possibilities and should be suggesting possible approaches to the problem of your unemployment. If you receive a redundancy lump sum on losing your job that will have to be dealt with too. A separate article looks at the treatment of a redundancy lump sum in the context of an IVA.