An Individual Voluntary Arrangement (IVA) can impact your employment situation depending on your job and circumstances. This article explains some of the employment restrictions linked with an IVA.
We suggest you certainly declare that you are in an IVA. IVAs are a matter of public record and there is a searchable online database on the Insolvency website. We are sure you wouldn’t want to be found out concealing your IVA. It shouldn’t have an effect on your employment but perhaps you should speak to your union or a confidential helpline.
There isn’t anything within the Insolvency Act that forbids you from this type of employment. However, it is always advised to check the terms and conditions of your employment and with any professional memberships or licences held. This way you will be able to see if there are any restrictions on the type of debt solution that is acceptable. Perhaps asking your professional standards representative may be the best place to start.
Ideally, you should talk to the personnel department, as it differs from force to force and what grade you are within the force. They usually do not mind as long as they know the whole story about your debt.
Please note, for those who work in the Police Force, as Company Directors, in the Armed Forces and some other legal and financial positions, an IVA or Debt Management Plan are the only choices you have as Bankruptcy is likely to result in you losing your job.
That depends on your contract. Your IVA supervisor will not contact your employer. We do not know of a reason why an IVA would affect your employment. However, it may be specifically stated in your contract that you are not allowed to make an arrangement with your creditors.
IVAs are recorded on the internet on the Insolvency website, so some employers may do vetting checks on their staff. Different jobs require different amounts of vetting. For example, if you are in the infantry you’ll have less access to sensitive information that if you are in Signals.
Officers cannot usually keep their commission if they go bankrupt but an IVA should not affect you.
An IVA does not mean that you are automatically barred from entry into the Royal Navy, speak to their careers advisers if you are worried about how this may affect you.
It is usual to do a financial check as part of any Security Clearance and a candidate with an IVA would need to discuss the IVA. It is important to consider why they are doing this; there is a need to establish if a candidate is financially responsible in their attitude towards debts. An IVA is a means of taking control of a debt situation and putting a plan in place that creditors were happy to accept, it is the alternative in law to bankruptcy.
Please note, if the application form specifically asks if you have ever gone through a form of insolvency you are legally obliged to be honest.
Unlike bankruptcy, you will not lose your job as a Chartered Accountant if you enter into an IVA. If your husband enters into an IVA it will not affect your job.
However, if you do not comply with the terms of the IVA a creditor could petition for your bankruptcy. In this case, you would be unable to continue work as an accountant.
An IVA typically runs for 5 or 6 years and the proposal to your creditors is likely to have details of what will be possible in the event of a change of circumstances. It could be that you are back in work in a short period of time and your income and expenditure may be the same as before, you may not have missed a payment at all. It could be that you are out of work for a while and then have a job on a higher, or lower, wage. If you contact your Insolvency practitioner they will be able to explain in detail what can be done now and what needs to be achieved to avoid the IVA failing. If the IVA cannot continue then other options may need to be considered.
If you have a change of circumstances during your IVA then contacting your Insolvency Practitioner (IP) would be the best place to start. It may be that a change to your IVA can be agreed with your creditors, it could be that your IVA can no longer continue and another means of dealing with your remaining debt is required. Speak to your IP and they will be able to help you update your financial statement and find the best way forward.
You are also supposed to submit a P60 as well as bank statements and payslips. I would contact your supervisor before your review and tell them or your IVA could fail.
Make sure you consider any extra expenses your second job has created, extra mileage, childcare etc.
Being self-employed does not mean you cannot enter into an IVA. In fact, IVAs were originally intended for unincorporated businesses such as sole traders. You will, however, need to provide evidence of your trading (financial accounts). So that your IP and creditors can see that you can afford the proposed repayments.
An IVA requires an offer of payment to creditors. This could be as a regular monthly payment, a lump sum payment, or a combination of the two. So being employed or self-employed may not necessarily be the thing that makes the difference between proposing an IVA or using an alternative debt solution to deal with debts.
The first stage of preparing an IVA, which is going to propose monthly contributions, is to create a financial statement and this illustrates to creditors the ability to make the monthly payments. Accurately noting income and taking account of all daily living costs to see what is really affordable as a monthly payment is essential. The difficulty can sometimes be that someone who is newly self-employed may not have sufficient time in business to be confident in the amount of money they will be able to draw an income.
Putting together a financial statement and discussing with a qualified debt adviser will allow you to consider all possibilities for dealing with your debts.
As you are being asked the question directly then you will need to answer it. They will be able to check this information quite easily. It would then show that you have an IVA and had not disclosed this on your form. Your IVA is listed on the Individual Insolvency Register. This is a public register that can be searched online. It shows current IVAs and any that have ended in the last 3 months.
Whether or not you need to forfeit your redundancy pay depends upon the terms of your IVA. You will need to speak to your IVA provider. Each contract is individual to the debtor’s circumstances. It may be that you have to hand over all or just part of the money. The most likely case could be that some of your redundancy payment will be classed as a windfall. A good IP should certainly allow you living expenses for the time when you are between jobs.
It also changes things if there is an element of the payment for compensation or damages, that shouldn’t be touched. But if it is for loss of income then it will count as income. Different IVA companies have different policies so you do need to speak to your IVA supervisor. You can also read your IVA proposal.
If your circumstances change while you are in an IVA you should contact your supervisor.
There are a number of things that can happen. A payment break can be arranged if the problem is only short-term. On the other hand, a couple of months payments can be added to the end of the arrangement.
If the situation is more serious the supervisor might decide to look at a variation. This is normally another meeting of creditors to vary the terms of the IVA. In this meeting, they may reduce the payments as an example.
Obviously, if you are unable to pay anything at all into the arrangement for a considerable time the IVA could fail. If you are unable to pay anything towards your debts and the situation is unlikely to change, then a good advisor would check if bankruptcy is a better option.
Your wife will need to inform her IP of any change in her financial circumstances. Even though the new household income only just covers the new household expenditure, she should play it safe and inform her IP.
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