Can I take a payment break?
When you enter an IVA, you commit yourself to maintaining regular payments, but what happens if your circumstances change? Can you take a payment break?
Well, Yes, you can.
Your IVA Supervisor has, at their discretion, the option of providing you with a payment break should they consider it necessary.
Introduction Of The IVA Protocol
Until the introduction of the 'IVA Protocol', most IVA proposals only allowed for 2 missed payments within the term of the IVA.
If an IVA went more than 2 payments into arrears the supervisor would consider it a breach and could, at that point, terminate the IVA.
But with the arrival of the IVA Protocol on 1st February 2008, the payment break clause was introduced.
All parties agreed it was in everyone's best interest to ensure that each IVA has the best chance of reaching a successful conclusion, and it was recognised that the existing limitations were too restrictive and even destructive.
Payment break clause
The terms and conditions of the IVA protocol allow for a payment break to be taken once during the IVA but, since the introduction of the latest revised IVA protocol on 1st October 2016, there are now 2 different permissable break terms.
IVAs started before 1st October 2016 are allowed a payment break of up to 6 months.
IVAs started on or after 1st October 2016 can apply for a payment break of up to 9 months.
The Supervisor has sole discretion on whether any break is justified and, therefore, whether or not it should be granted.
Having access to a payment break provides significantly more support for those experiencing difficulties during the IVA which, in turn, helps more IVAs complete successfully.
The clause also maintains the authority of the Supervisor by empowering them to determine when a break is required, without the need to convene a variation meeting.
Reasons for a payment break
A temporary loss or reduction in income tends to create the most common grounds, particularly when someone is made redundant or, perhaps, forced to take time off work due to illness.
But, equally, the need for a break could involve the unexpected and expensive domestic emergency, such as a boiler failing or car breakdown.
Getting back on track
If a payment break is taken, the supervisor will extend the IVA by the same number of months equal to the break, to ensure the creditors aren't disadvantaged by any loss of payments.
Communication is key
As with all IVA problems, it's far the better to inform your Supervisor as soon as you realise there's a problem.
By keeping them informed you significantly increase your chances of reaching a successful outcome.