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.
Change from an IVA to a DRO?
Can’t pay your IVA this month?
How equity release works in an IVA
PhilipTI says
Hi Sara
I had my penultimate annual review this May under the new company Ebenegate (previously Vanguard). In the email where I submitted my details, I outlined a payrise I’d had, along with 3 months payslips etc. This was all approved and they said my payments wouldn’t change even though my pay had increased. I have had zero issues throughout the 4 years of IVA so far and have always declared any overtime at that time.
At that time I confirmed receipt and asked what my new threshold for overtime was before I had to pay back 50%. This information is normally confirmed along with the approval of the review. I heard no response.
I queried in September again as to what my max earning threshold was as I have some potential overtime on offer, and they came back and said the same figure as last year before my pay increase. I queried it.
They’ve come back and now want to fully redo the annual review with payslips and bankslips etc which I find very strange, saying that they need it to cross reference with my annual review. Nothing has changed since my annual review and I’ve made that clear.
I realise it may be in the long term best interests just to go through it all again, but I’m loathe to bend over to this bullyish approach.
Is there a best way to handle this?
Sara (Debt Camel) says
It’s better to go along with this and find anything now rather than at your final closing review. Presumably your expenses went up as well as your income, with the cost of living rising?
PhilipTI says
Hi Sara
Not sure you follow, the pay increase was before the annual review in May and fully declared on that, which they approved. So nothing has changed since then with my take home. I don’t have any expenses with my role. If the threshold is only £40 then I won’t do the overtime as it’s not worth it.
My point was that the take home had increased before the annual review but they didn’t increase my threshold so I can only earn an extra £50 or so before I have to pay back 50%, whereas last year it was more like £100
Sara (Debt Camel) says
yes I did get that – but my point is that I don’t know what they have done wrong but it’s probably best to get it sorted.
My reference to “expenses” was to your living costs, not work expenses.
PhilipTI says
Ah, ok.
I guess it’s only 6 months or so until I’m finished and then this should all be over, it’s best to keep them happy.
Thanks for the advice, much appreciated, especially this late on a Friday.
M says
Hi Sara,
My first annual review is coming up in Jan 2023 and was wondering if you could answer a few questions that I have?
I have informed my practitioner that my income has gone up and they said they will just review it in the annual review and wont back date to when my income went up in sept 2022, is the normal/true?
I think I’m in a position where I could pay my debts in full over the course of the five years wouldn’t it be better to terminate the iva so I can have more control and flexibility over where and how I spend money + save as much money as I like as long as I’m paying my creditors each month?
If i was to terminate, can I just go back to paying my creditors monthly? One of my creditors sold the debt I had with them to another company, would they expect everything I owe upfront or still proceed monthly?
If I was to stay in the IVA and my payments increased, would I be paying more than my original debt if my disposable income allows? Or will they increase the monthly payments to the reflect the original debt at the end of the 5 years? I dont want to pay more than I originally owed.
My original debt was £27.5k, with the iva I am paying of £7.2k of the debt over five years. My current monthly repayments are £121 and by the time of my 1st annual review I would have paid 10 months.
My salary has increased by £700, my rent has increased by £200 so I have £500 that is classed as ‘disposable income’
Thanks in advance,
M
Sara (Debt Camel) says
they said they will just review it in the annual review and wont back date to when my income went up in sept 2022, is the normal/true?
If tha5 is why they told you, it should be OK
wouldn’t it be better to terminate the iva so I can have more control and flexibility over where and how I spend money + save as much money as I like as long as I’m paying my creditors each month?
An IVA may have been a very poor option for you at the start but now you are in it it isn’t easy to terminate it, it will not remove the IVA marker from your credit record and if you do terminate it then you will still owe the IVA firm their fees which will be several thousand pounds.
If i was to terminate, can I just go back to paying my creditors monthly? One of my creditors sold the debt I had with them to another company, would they expect everything I owe upfront or still proceed monthly?
You will have to sort out repayments with each creditor. But this is probably a very poor option for you.
If I was to stay in the IVA and my payments increased, would I be paying more than my original debt if my disposable income allows? Or will they increase the monthly payments to the reflect the original debt at the end of the 5 years? I dont want to pay more than I originally owed.
You also have to pay the IVA fees which will probably be at least £3500
My salary has increased by £700, my rent has increased by £200 so I have £500 that is classed as ‘disposable income’
What else has gone up – energy bills, petrol, food, broadband etc?
M says
Hi Sara,
Thanks for your response.
I think my main query is if it is possible to pay each of my creditors and now debt collector on a monthly basis if I was to terminate. I know I will probably need to pay the IVA fees too which will bring my total debt to about £31k. I just think I can pay this down monthly over a period of 5 years but also have my own flexibility. Where as if I was to stay in the iva and pay everything back, I would end up paying more than £31k?
For example if my salary was to go up again over the course of the 5 years whilst in the iva will there be any cap to how much my monthly contributions would be given my total debt and iva fees or will they just take more?
My petrol has gone up by about £100, the nature of my new roles means I have meeting lunches with colleagues a few times a month but these are not expensed so not sure how that works with the iva and my utilities are included in my rent payment so the £700 reflects increases in that too.
Thanks,
M
Sara (Debt Camel) says
See https://debtcamel.co.uk/when-iva-fails/ for what happens when an IVA fails.
There is no standard set of things that will happen if you choose to fail an IVA and pay your creditors. This is rare. Creditors probably won’t have a fixed policy about how to react.
whilst in the iva will there be any cap to how much my monthly contributions would be given my total debt and iva fees or will they just take more?
No you shouldn’t have to pay more than the IVA fees plus the debts. But the few may be surprisingly large.
I think you should tell your IVA firm about the extra petrol and lunch costs. Start keeping records.
M says
Okay thanks for your help Sara!
M
Katherine says
Hi i have been in an iva for nearly a year not had first review yet. I really anxious as if checking my bank statements i regularly transfer money to my daughter to help her and then i use salary advance scheme to borrow from wages each month. How will this affect review.
Sara (Debt Camel) says
How much are you giving her? There is a lot of difference between £20 and £200. Why does she need this money and will this continue?
Presumably the IVA payments are hard to manage if you are having to take salary advances? Have your own expenses gone up eg food, energy bills etc? How large are your IVA payments and do you have a house with equity?
Katherine says
No i live in housing association so rented. Bankrutcy isnt option as would affect my job. I lend her say up to 200 month which she pays back in bits. I can manage but do use salary advance but i trying to stop now. Also my friend lent me money over xmas. I just worried over 1st iva review and if i let it fail can i get DMP with step change. I suffer with anxiety and have reduced my hours slightly at work. Thanks for reply any advice appreciated
Just to add it not the iva payments that are high its 100 a month. Its my bad money management and helping daughter that im in debt. My debts are just over 6000 and i can afford the 100 month it just the review i worried about
Katherine says
Do u think it best for me to get DMP but id have to let iva fail.
Sara (Debt Camel) says
I think it’s probably best to go through the IVA review and see what they say.
If you have been lending your daughter money and she has paid most of it back in the month, this doesn’t sound too huge a problem. Lending your daughter £200 a month and not getting it repaid adds up to a lot over the year.
(But regardless of the IVA, this doesn’t seem a good habit to get into. I think you should suggest your daughter talks to Stepchange about a DMP so her own finances can be put on a more secure footing. )
You need to stop using salary advances for the same reason – doing it one month makes every future month harder.
You think you aren’t good with money, – an IVA is supposed to simplify things so you just have one affordable payment a month. But with lending money to your daughter and the salary advances this feels far from simple.
I think you should have a think and write down everything that has gone up since your iVA started. groceries. Council tax, Energy bills. MObiles? Broadband? etc etc It may well be the £100 is too high.
If an IVA fails, you could have a DMP with StepChange. But the IVA still stays on your credit record for the rest of the 6 years.
Do you mind saying what your job is?
Katherine says
Its Payment advisor for mobile phone company. I did a online thing with step change income expenditure and says ky debts be paid off in 3 years. I wish i gone with them before but saw advert on fafebook clicked on it and got call and then iva set up. Also one of my debts scottish power i disputed and didnt owe it was their mistake as billed me for 18 months after moving out of a property. I told iva this bit they included it as on credit file as default.
Thank you for reply
Katherine says
Also im on insolvency register so this would affect my employment. I thought it only bankruptcy so if iva fails will name be taken off register. Do u think if let it fail i be made bankrupt or will be able to set up dmp with stepchange. Thanks
Sara (Debt Camel) says
it’s very unlikely you would be made bankrupt but I think you need to know what will happen at the annual review before you make any decisions. Then you can discuss your options with StepChange.
Kathrrine says
Ok thank you for advice
Aimee says
Also about to start my IVA review and worried about it. How did it go?
Thanks
Caroline says
Hi,
I’m 3 years into my IVA. It was obtained through MLS Solvency Ltd. I was first with Carrington Dean then it changed to Ebengate and now it’s with Creditfix. The whole time a card payment has always been paid to Creditfix from my bank account. I was sent my Chairman’s Report at the start which I still have and also yearly statements. One of my creditors is a bank account and this bank are still adding interest onto the overdraft on the account, should this be happening as they are part of my IVA? It was at £100 and now it’s up to £190! I’ve also never had yearly reviews with any of the companies I’ve been with over the course of this IVA. I receive a text message stating my payment is due and then it’s taken out of my bank each month. I’ve never missed a payment. Is this normal? I’m afraid I’m case I’ve been conned or something and my IVA is fake. I also can’t find my name on the IVA registry. All of my other creditors named on my IVA have never contacted me chasing me for payments so I assume the IVA is legit or I would have had debt letters and companies chasing me. On my credit file my creditors are on as all Defaulted. Grateful for any help. Thanks.
Sara (Debt Camel) says
That sounds very confusing.
Do you know the name of the Insolvency Practioner at the start of your IVA? It would have been on your IVA paperwork.
Does your credit record show that you are in an IVA?
Caroline says
Hi Sara,
At the start I was with Carrington Dean and a David Rankin signed my paperwork. I just checked my Clearscore and my IVA isn’t listed on it.
Sara (Debt Camel) says
I have emailed you.
Rosie says
Hi Caroline
I just came across your comment while researching MLS Solvency Ltd as a thinking of and IVA, can I ask if they were any good and what happened with your case? I’m a bit concerned about signing anything now!
Sara (Debt Camel) says
people don’t normally carry on looking at a page over a year after they first posted so you may not get a reply.
but whether she got a great result or very poor one is largely irrelevant for whether an IVA is a good idea for you… Can you start a new thread and say something about your situation?
K says
Hi Sara,
I setup an IVA in July. It’s the best thing I ever did in terms of weight off my shoulders. I’ve been looking at moving across the country for a new considerably higher paying job. At what point would I need to tell my IVA practitioner? I’m also concerned about the yearly review, how many payslips do I need to submit?
Sara (Debt Camel) says
Will you need a new tenancy? Will your expenses also increase when you move?
Gill says
Hi, I’m up for my 1st review now, I’m 70 years old and suffered a nervous breakdown a few years ago, I still have severe anxiety also, my condition contributes to the need of a comfort blanket , I’m with payplan, since being with them I have gone completely the other way and save like a squirrel, will they make me pay more, as my savings have replaced the cards so I’m terrified of loosing it
Sara (Debt Camel) says
how large are your savings?
do you own your own house or are you renting?
looking forward to winter – will you be increasing your energy payments? do you have xmas presents to buy? what around the house needs to be replaced?
Kat says
Hi, I have just finished a conversation with Creditfix and I am still confused. I have been on the IVA for 4 years and it is supposed to come an end in 12 months. My whole debt was 6900 pounds plus the Creditfix fees 3650 pounds. I have to date paid back 9400 pounds but my annual review states that I am expected to pay back 12.190 pounds now. My salary increased significantly after 6 months entering the IVA and I am currently paying 253 pounds a month. I am very confused why do I have to pay back so much more than my original debt + fees? I though the IVA was about writing the debts off and if you can afford then you can pay back in full + fees, but now I am paying so much more than my original debt. I do not understand why the total sum keeps running away from me and increases every year. Creditfix said that it is all about the affordability but then it is only beneficial for people whose financial circumstances are not expected to improve during the 5 period time?
Sara (Debt Camel) says
How large were the total debts that went into your IVA?
Kat says
I owed my creditors 6900 pounds in total. Plus, as per agreement the fees to Creditfix (3650 pounds).
Sara (Debt Camel) says
I too don’t understand why you are expected to pay more.
Kat says
Is there anywhere I could turn to for the advice? I have done so much research and have not found an answer. It was recommended to me as a solution to write debts off and I have no problem of paying back in full which I already have, but paying so much more does not make sense. Discussion with Creditfix did not lead anywhere.
Samantha Warburton says
Hi Kat, I am one of the Insolvency Practitioners at Creditfix, please could you contact me by email at samantha.warburton@creditfix.co.uk so that I can look into your case and resolve matters for you.
Kind regards
Sam
Karl says
Hi Sara,
I’m about to enter an IVA. My debts are about £28,000 but the application has stated that I need to pay £410 a month until month 46. From month 47 to 72 they are saying monthly payments to go up to £901 per month as a secured loan will be repaid by then and they expect the contribution to be included. This puts may payments to near £43,000 over the term.
Why would I need to pay so much more than I owe?
On the IVA creditors list is also £29,000 which I’m being told is with Halifax for a credit card. I’ve contacted Halifax and they’ve confirmed I don’t owe them that debts and the only card debt I had with them was transfered to Cabot finance back in 2018 which now stands at £10,000 and is included in my £28,000 debt I mentioned above.
I don’t want to accept the IVA if I’m going to be forced in paying over £900 for 26 months and we’ll over the total debt I owe.
Any suggestions?
Sara (Debt Camel) says
Tell your IVA firm you don’t want this. There is no point in an IVA unless there is a significant debt write off. An IVA is very intrusive and a form of insolvency that you will have to declare on future mortgage applications. You can get an IVA stopped up to the point it is voted on by your creditors.
Contact StepChange and look at a DMP instead. On those numbers, you will have repaid all the DMP debts in a bit under 5 years.
Do not go to any DMP firm that charges fees -StepChange will give you the same DMP with no fees at all.
New Interest is almost always frozen in a DMP – IVA firms are scaremongering by saying it may not be, or if they say you will have to contact all the crediors – StepChange do this for you..
Karl says
IVA PAYMENT £410 A MONTH X 46 MONTHS
IVA PAYMENT – £901.00 FROM MONTH 47 TO MONTH 72 – FOLLOWING THE SECURED LOAN ENDING IN MONTH 46
Board and Lodging
If any instances of co-habitation with the Debtor by any person aged 18 or over occur during the term of his Arrangement and where there is reasonable expectation that Board and Lodging should be paid, the contribution will be added into this Arrangement in full.
Income and expenditure review
The debtor agrees to provide an income and expenditure review in the month following the reduction in child related income. Any surplus identified is to be made available immediately for the benefit of unsecured
creditors in the arrangement. Failure to comply with this modification will constitute a breach and may result in termination.
Life Insurance
The debtor is to seek alternative life insurance with a view to reducing the current monthly expenditure. The debtor is to provide the Supervisor with documentary evidence of their investigations within three months of approval. Any surplus is to be introduced into the arrangement for the benefit of creditors.
Watch Portfolio – WPM Fixed Fee
Sara (Debt Camel) says
Do you have a child under 18 that you are currently getting benefits for?
Because this is a VERY one sided clause:
“The debtor agrees to provide an income and expenditure review in the month following the reduction in child related income. Any surplus identified is to be made available immediately for the benefit of unsecured creditors in the arrangement. Failure to comply with this modification will constitute a breach and may result in termination.”
Basically if you get more more money you have to pay it to the IVA but if you get less (eg child at uni) then your IVA oayment wont be reduced
Karl says
This is what I have been sent today,
Dear Karl,
CONGRATULATIONS, YOUR IVA HAS BEEN APPROVED!!
PLEASE READ THIS EMAIL CAREFULLY AS THERE MIGHT HAVE BEEN CHANGES TO THE PROPOSED APPLICATION TO CREDITORS.
IF YOU’RE HAPPY TO ACCEPT THE APPROVAL PLEASE REPLY TO THIS EMAIL “READ AND ACCEPT”
Please be aware until your IVA has been approved by you, the meeting remains open, as such creditors could submit a rejection or modificaiton that might impact the outcome of the meeting.
We have held the meeting of creditors and your creditors have voted to approve your Iva, this means that you’re now legally protected, however before we can formally put the protection from your creditors in place, we need your agreement and approval.
Sara (Debt Camel) says
So if you don’t want this very expensive IVA – and it sounds to me as though a DMP would be a much better optionm (over sooner, less paid in total, less damage to your credit record) – you need to reply immediately and very clearly saying “I REJECT THIS IVA. I DO NOT WANT IT TO PROCEED. CANCEL MY APPLICATION”. I suggest you also phone them up and say this.
Who is your IVA firm and the Insolvency Practitioner named on the IVA? It would be good to copy your rejection email to the IP – if you let me have the name I can tell you the IP’s email address.
Karl says
Hi Sara
Thank you do much.
I’m just filling in step change now for a DMP.
When I completed my Iva details they wanted household income but step change only wants my income and payment contributions. This shows my personal spare cash as being a lot lower. I will this cause issues?
Creditor Team
IVA Help Limited
Suite 16f, The Beehive, Lions Drive, Lions Dr, Blackburn BB1 2QS
Sara (Debt Camel) says
ok that firm only seems to have one IP so copy david.griffiths@ivahelp.uk into your rejection email.
When I completed my Iva details they wanted household income but step change only wants my income and payment contributions. This shows my personal spare cash as being alot lower.
Well this is your decision. An IVA using a lot of your partner’s income may be very difficult to cope with the payments.
With a StepChange DMP the payments will be lower but your household will be left with more spare income – so your partner could use the extra to clear the secured loan earlier? Or to save up the extra and then your partner could make full and final offers to your debts when they have been in your DMP a while?
If you find in practice there isn’t any “spare cash” in the StepChange DMP it is a sign that you would have struggled very badly with the IVA and it may have failed.
Karl says
I have just rejected as per the advice you have provided.
Thank you.
I’ve completed step change DMP application and breathing space application. I hope this give me enough time to sort out the bridge between the iva and DMP.
I am grateful for your assistance and advice.
Sara (Debt Camel) says
Here are a couple of posts about starting a DMP and speeding one up that may help.
https://debtcamel.co.uk/stop-debt-payments-before-dmp/
https://debtcamel.co.uk/7-ways-to-speed-up-a-dmp-so-it-finishes-sooner/
Robert Harrison says
Hi guys, trying to sort my first Iva annual review currently but (stupidly) changed banks and closed my old account shortly before the review was due ( this process was never mentioned or explained at the start of the Iva). What can I do as I don’t have the bank statements and frankly I’m sending myself crazy with worry that it will fail now.
Sara (Debt Camel) says
you can get bank statements from closed accounts.
Kyle Harrison says
Hey my review is due now and my wage went up by a pound a hour, other than that I have no other changes, I didn’t inform them that by wage went up by a pound a hour.
Worried ill have my iva terminated
Sara (Debt Camel) says
None of your expenses have increased?
Kyle says
My rent has gone up by 50 a month
And my new wage still doesn’t go over the 10 percent. If over I need to repay?
Sara (Debt Camel) says
Well look back and check how much your council tax, mobile and broadband went up in April. And food must have gone up a bit? Car insurance?
Most IVAs say something like “you must report any overtime, bonus, commission or similar to the supervisor if this is not included in your original calculation and the amount exceeds 10% of your normal take home pay.” – it doesnt sound as though yours has, so there shouldnt be a problem with not reporting this.