Earning More in Your IVA, Question by Question
How a pay rise, overtime or a bonus affects what you pay and keep.
What happens if my income increases?
Your payment may go up, but you keep some of the rise. If you start earning more and your essential costs stay the same, you have more disposable income, and a share of that extra usually goes into the IVA. The rest is yours to keep. So earning more does leave you better off, even though part of the increase helps clear your debts faster.
How much extra will I pay?
As a rule of thumb, about half. If your spare income rises, the common approach is that roughly 50% of the increase goes into the IVA, with you keeping the other 50%. For example, if your disposable income goes up by £100 a month, you might pay around £50 more and keep £50. Your supervisor will confirm the exact figures at your review.
What about overtime and bonuses?
These have a little leeway. One-off or variable extra income, such as overtime, commission or a bonus, is usually subject to an allowance: you can keep additional income up to around 10% of your normal take-home pay before anything is shared. Above that threshold, the extra is typically split roughly 50/50 with your creditors. You normally need to report it within a set time.
Do I have to tell my supervisor?
Yes, always. You have a duty to report increases in your income, whether a pay rise, a new job, or significant overtime and bonuses. Hiding extra income can be treated as a breach of your IVA. It is far better to be open: your supervisor will work out any change fairly, and you keep your share, whereas concealment can put the whole arrangement at risk.
When is the change worked out?
Usually at your annual review, and sometimes sooner. Your income and spending are formally reviewed each year, which is when most adjustments are made. Larger or one-off increases, like a sizeable bonus, may need reporting straight away rather than waiting. Keeping your supervisor informed as things change makes the review smoother and avoids any surprise catch-up payments.
Will my IVA finish sooner if I pay more?
Not usually. Paying more each month generally means your creditors receive a larger share, rather than the IVA ending early, the term is normally fixed at five or six years regardless. What a higher payment does is increase how much of your debt is repaid. If you want to finish early, that is usually done through a separate lump-sum settlement, not by paying extra monthly.
What if my costs went up at the same time?
Then the increase may not change your payment much. The calculation is based on your disposable income, so if your essential costs have risen alongside your pay, your spare income may be little different. Your supervisor looks at the full picture at your review, income and outgoings together, so a pay rise swallowed by higher rent or bills will be taken into account.
Should I get advice?
If you are unsure how an increase affects you, yes. While your supervisor handles the calculation, a free, impartial adviser can help you understand the rules around pay rises, bonuses and the income you keep. It costs nothing, and it can give you peace of mind that you are paying the right amount and keeping everything you are entitled to.
