Missing one of your payment dates whilst you have an Individual Voluntary Arrangement (IVA) can have serious ramifications, and could result in the forfeiture of your agreement unless you take the correct measures you remedy the situation. As such, being aware of what to do when you begin to struggle making payments on time is of paramount importance to your retention of your IVA. The following guide will map out to you what you should do straight away if you miss an IVA payment.
If you have failed to make one of your monthly payments on the date specified by your agreement, then it is imperative that you are proactive and get into contact with your presiding insolvency practitioner (IP) immediately. Alert your IP about the reasons behind your missed repayment and enquire about whether they can allow you to make your payment at a later date.
Your IP is not entitled to accept the offer of a late payment, though they may well do so if you provide them with ample justification for your missed payment. If you had issues with your bank for example, or your employer is late paying your invoice, then these could constitute valid reasons which warrant allowing you to make a payment late and retain your IVA.
Notice of breach
When you fail to make your monthly IVA repayment on time, the likelihood is that your presiding IP will send you a notice of breach. This document will request that you send a formal explanation about why you missed your payment and will ask you to rectify the issue as soon as possible. Most IVA agreements will entitle you to up to three months to reply to the notice, though a failure to do this could lead to more severe consequences, such as the loss of your IVA altogether.
If you fail to make your payment at all
If you fail to respond to your notice of breach and neglect payment altogether, you are putting yourself at risk of your IP doing the following:
- A modification of the terms of your individual voluntary arrangement. This is the best possible outcome because your IP could choose to lower your monthly repayments in accordance with your financial situation if it materialises that it has got worse and you cannot afford to make the previous payments anytime soon.
- Rescind your IVA agreement and provide you with a certificate of termination
- Lobbying the courts for your personal bankruptcy
If you have missed your IVA payment as a result of your situation getting worse and the monthly finances at your disposal deteriorating, then you should alert your IP of this immediately, and they could change your deal to reflect your new circumstances.