A reader asked:
I’m worried about my first IVA annual review. How much detail will they go into? I’ve found the year tough with a few car problems. I switched gas and electric to try to save money but it hasn’t helped much.
This is one of the many IVA issues where I have to start by saying that there is no definitive answer for everyone. It depends on the terms of your IVA, your IVA firm, your own situation and on how much your situation has changed over the year.
If not much has changed
Previously many people’s annual reviews were pretty painless – their income hadn’t gone up much and neither had their expenses. In 2022 more of them are proving problematic.
You will normally be asked for some bank statements (or, sometimes, direct access to your bank account through Open Banking), some payslips and any P60s/P45s. Some firms want you to complete a new Expenses form – you can use the one agreed at the start of your IVA or the previous year as the basis and then look at your recent bank statements to see how much has changed.
If the overall picture and the bigger items such as mortgage/rent, travel costs, utilities look much the same, not many lenders will go deeper. They don’t want to spend any more time on your annual review than they have to! You are very unlikely to be asked what you bought at John Lewis for £120 in September or challenged about £20 spent on bingo in May.
Do you have to provide these bank statements?
Yes. See this clause in the 2016 Protocol:
8(2) You promise to give the Supervisor whatever type of accounts or details (or both) of your income and expenditure relating to your affairs, for whatever date and period, as the Supervisor may reasonably require.
Your IVA may not use those exact words but there will be an equivalent, sometimes the broad do all such things as the Supervisor reasonably requires.
The IVA firm has to verify your income and expenditure and asking for bank statements is a reasonable way to do this.
You have had extra income (or lower expenses)
Your income may have gone up because of a payrise, better job, bonus or overtime. I have looked at how these are handled in an IVA here: Bonuses & pay rises – what happens if you are in an IVA
Increases in your pay will result in your future IVA monthly contributions being increased, unless your expenses have also increased, see below.
You should have reported overtime and bonuses to your IVA firm during the year if they exceeded 10% of your normal take-home pay. If you didn’t do this at the time, this will be looked at in the annual review and you may now owe some money for last year, typically 50% of the amount over the 10% you are allowed.
When you had put that money aside, you can simply pay it. If you didn’t, your IVA term may be extended by some extra months to allow you to pay the extra.
If your expenses have gone down, this increases the amount of “surplus income” you have. This can happen if you were single but now someone else is living with you and sharing the household bills.
This comes as an unpleasant surprise to some people who thought they just had to make the “agreed payments” for the five years of their IVA. It should have been explained to you before the IVA started – it probably was, but you may have thought it wasn’t important, just small print.
Your expenses have gone up – the problem of inflation
You may think your IVA firm just wants to do the annual review to get extra money from you. But increases in your expenses also need to be taken into account. Especially with inflation increasing the price of food, energy bills, petrol and other essentials.
The annual review is a good time for you to get these reviewed if things have gradually got worse during the year. It is to your advantage to make sure this is done!
Think about recent changes in particular. For example if your council tax or water rates have only just gone up, the annual total for last year may not be very different to the budget, but you now know that next year’s expenditure will be higher so this needs to be pointed out to your IVA firm.
Also bring up changes you know will happen in the next year eg your mortgage fix ending and you mortgage payments jumping a lot ask your IVA firm to agree that your IVA payments can be reduced when that happens.
If your income has gone up, did you also get additional costs – perhaps the price of petrol has increased your commute costs.
They have always had the discretion to reduce your payments by 15% from those originally set in your IVA. In the summer of 2022 extra flexibility was added so they can reduce it by up to 50% if your problems result from cost of living increases.
Larger reductions may be possible if your creditors agree. These reductions are more likely to be possible if you are paying £200 a month than if you are only paying £110, where there is little room to reduce the payments. But it may be possible to get your IVA firm to agree that your IVA should be completed early “on the basis of the funds you have already paid.”
Dealing with the B team for Customer Service?
After being cherished and valued while you were in the process of signing up for an IVA, the annual IVA review process may feel very different. You get a curt email telling you to produce six payslips and three bank statements and to fill in an Income & Expenditure form.
Even the most factory-like IVA company actually would rather your IVA succeeds than fails – it means less work and more fees for them. But many large IVA firms do not have a good reputation for customer communication. It’s hard to talk to anyone on the phone and emails sometimes seem to be ignored.
If this happens to you, don’t panic, it doesn’t mean your review is going to go badly.
But some people get told they have to increase their monthly payments a lot when there doesn’t seem a good reason for this. If this happens to you, ask the IVA firm to explain how they got to that number. Be prepared to keep restating your point. Start to do this in writing (email is fine) and insist on getting a reply if you think they are ignoring something important.