IVA Payment Breaks: Your Comprehensive Guide
We understand that unexpected events may happen that can cause financial difficulties. If you find yourself in a situation where an unavoidable or unexpected cost or loss of income makes it impossible for you to make your regular IVA payment, you may want to apply for a payment break.
This guide will provide you with detailed information on what a payment break is, how to apply for a payment break, and how it can affect you in the future.
By understanding this information, you can make an informed decision about applying for an IVA payment break.
In this guide, we’ll cover:
What is an IVA payment break?
An IVA Payment Break is a temporary delay in making a payment on an Individual Voluntary Agreement (IVA) due to unexpected or unavoidable expenses or loss of earnings.
To be eligible for a payment break, you must provide documentation, such as bank statements, that shows that the cost cannot be covered by other means. The decision to grant a payment break is then made by the Insolvency Practitioner who manages the IVA agreement.
If a payment break is granted, the payment in question will be delayed and the overall length of the IVA will be extended.
Am I eligible for a payment break?
To be eligible for a payment break, you must have an unexpected or unavoidable expense or loss of income that affects your ability to make your IVA payment. The decision to grant a payment break is made by the Insolvency Practitioner overseeing your IVA agreement, who will assess your documentation and determine if a payment break is the best option for you.
In some cases, there is an alternative solution that is better for your personal circumstances. In this case, our team is on hand to offer you expert advice and support.
Step-by-step guide to applying for a payment break:
1. Make note of the unexpected or unavoidable expense or loss of income.
You will need to explain to our team why you cannot make your IVA payment.
2. Gather documentation evidence that supports the reason for the missed payment.
This is usually a bank statement from the month the payment was missed. In some cases, other forms of evidence may be accepted, depending on the reason for the missed payment.
3. Contact our team and inform them of your intention to apply for a payment break.
Our team is here to support you throughout this process.
4. Provide the documentation evidence to the team.
This will be reviewed by your Insolvency Practitioner.
5. The Insolvency Practitioner will review the evidence and make a decision.
The Insolvency Practitioner will ensure that the solution offered to you is the best possible outcome for you and your circumstances.
6. You will be informed of what solution is best for you.
If the payment break is granted, the payment in question will be deferred to the end of the IVA, resulting in an extension of the IVA. If the payment break is not approved, we will be able to offer support in an alternative way.
What are the alternatives to a payment break?
An alternative to taking a payment break is a catch-up arrangement (CUA). This option allows you to spread the unpaid amount (arrears) over a period that is manageable for you. This way, there will be no need to extend the IVA and no need to make changes to the original agreement.
In most cases, you will not need to provide evidence to us to get this solution up and running. However, if a payment on the CUA is missed, creditors may request evidence from the original month missed.
If this is a good option for you, our team will explain this in more detail.
How do I send my bank statement?
There are several ways to send bank statements as evidence when applying for a payment break:
Option 1: Email
The easiest and quickest way to send bank statements is via email.
If you have online banking, you can log in and find your monthly bank statements, then download these as a PDF and send them to fsspayments@financialsupportsystems.co.uk.
For a guide on how to download a bank statement, please go to our Annual Reviews & Changes in Circumstances page.
Option 2: Screenshot
If you are unable to download your bank statements, you can take a screenshot of the statement and send it via email.
Please make sure that the dates are clear on the statement.
Option 3: Photograph
You can take pictures of paper copies of bank statements.
Please make sure these pictures must be clear and show the dates and name of the account holder.
Option 4: Post
A final option is to send the bank statement via post.
This is not recommended, as there is no control over how long it may take for the statement to reach us.
Important note: If you send in bank statements that show funds have been transferred to and from other accounts, you may be requested to also send in other statements if you hold more than one account.
Can I send other evidence?
In addition to bank statements, there are other forms of evidence that you can submit to support your application for a payment break:
Option 1: Wage Slip
If the payment break is due to a loss of income, you can submit a wage slip as evidence.
The wage slip must show the clear dates and name of the account holder.
Option 2: Receipt or Quote
If you have had to purchase an essential item or pay for car repairs, you can submit a receipt or quote as evidence.
The receipt or quote should show that the purchase or repair has been made or arranged/paid for. It should also be dated.
It’s important to note that these forms of evidence may only be accepted depending on the reason for the missed payment and the discretion of the insolvency practitioner overseeing your IVA agreement.
What do I do if I’m going on maternity leave?
If you are going on maternity leave, we would need to see a letter from your employer stating when your maternity starts.
In some cases, a forecast of your maternity pay may also be requested, so it may be helpful to prepare this too.
Thinking of requesting a payment break?
Click below to talk to our team about your options.