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Original poster

IVA advice needed - re payrise

9 replies

Debtdolly · 23/12/2023 21:11

Name changed as potentially outing and I don’t want to be linked to any family related posts.

I am currently 3 years into an IVA with just under 3 years to go.

My employer has informed me this week that I will be getting a substantial pay rise from January (just under £6k per annum). I am presuming that all of the extra money I receive each month will be paid straight into the IVA - which is understandable as it’s money I owe. However, by doing some quick calculations, it seems that I will end up paying the debt back in full one year ahead of time, including the £3.5k fees (I checked the paperwork).

Obviously the thought of this being over sooner is great; albeit a little frustrating as if I had expected this to happen I would have continued repaying the debts instead if entering an IVA which will end up costing me thousands!

I just wondered if anyone had experience of this and if my assumptions and calculations are correct, or if there is anything else I should be aware of in relation to paying off early. I know that the IVA stays on my record for the full 6 years but is there anything else I should know?

Also can’t help be slightly disappointed that I won’t benefit from the rewards of my hard work for a couple of years, but such is life!

OP posts:
annahay · 23/12/2023 21:22

My husband has a monthly threshold- 50% of any pay over that goes into the IVA. So you might get to keep some of it each month.

KnickerlessParsons · 23/12/2023 21:23

Are you accounting for tax?

Original poster
Debtdolly · 24/12/2023 09:02

Yes I used a salary calculator online to work out new income after tax

OP posts:
Original poster
Debtdolly · 24/12/2023 09:04

annahay · 23/12/2023 21:22

My husband has a monthly threshold- 50% of any pay over that goes into the IVA. So you might get to keep some of it each month.

This was the case when I received a bonus earlier this year, but I’m sure when I last got a payrise they just adjusted monthly payments again.

my annual review was in September.

OP posts:
annahay · 24/12/2023 09:06

@Debtdolly my husband changed jobs (with a 9k pay increase) and just pays 50% of money over his threshold until his next review in October.

Kath85 · 27/12/2023 18:05

Only 50% of your surplus income each month will be requested into the iva

Winederlust · 27/12/2023 18:08

Unless you mean you will be repaying 100% of the debts you owed at the start of your IVA, you won't pay the IVA off sooner, you will just pay more back to your creditors.
PP is right that, generally, you will pay 50% of your pay rise in increased contributions but it will very much depend on the contract you signed. I would urge you to read the T&Cs with a fine tooth comb.

Catsknowbest · 27/12/2023 18:13

Winederlust · 27/12/2023 18:08

Unless you mean you will be repaying 100% of the debts you owed at the start of your IVA, you won't pay the IVA off sooner, you will just pay more back to your creditors.
PP is right that, generally, you will pay 50% of your pay rise in increased contributions but it will very much depend on the contract you signed. I would urge you to read the T&Cs with a fine tooth comb.

Edited

This is correct I'm afraid- you will pay more back, not more quickly

Original poster
Debtdolly · 27/12/2023 21:17

Winederlust · 27/12/2023 18:08

Unless you mean you will be repaying 100% of the debts you owed at the start of your IVA, you won't pay the IVA off sooner, you will just pay more back to your creditors.
PP is right that, generally, you will pay 50% of your pay rise in increased contributions but it will very much depend on the contract you signed. I would urge you to read the T&Cs with a fine tooth comb.

Edited

Yes if they adjust my monthly income so that all the new surplus is paid into the IVA then I will pay back 100% of the debt plus the £3.5k fees that the IVA management company take in 25 months, which is about 13 months before the IVA is due to end. I am wondering if there are any other hidden costs/consequences of this though.

I will read through my paperwork more thoroughly, I have tried to access it on my online account but the documents won’t download 😏
Im sure I kept hard copies.

OP posts:
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