Increase in wifes income whilst on IVA

the_bright_side

Just been reading through my draft IVA and one of the terms is that any increase in income, the IP will need to be notified then 50% of the increase (after the 1st 10%) will then be taken.

My wife is currently employed part-time and a percentage of her income was included, if at a later date she goes full time, or gets promotion will I have to notify the IP of her increase. Only a percentage of her wage was included as all of my debts we solely mine?

FoggyBrain_2

Check it out with your IP before signing .. but my undestanding is, as the IVA is only in your name, that your wife's income is only used to calculate the percentage she contributes to the expenses. So if both partners earn roughly the same it is assumed they pay have the household running cots each, if one earns less than the other she or she pays less.

So, as your wife's wage increases your share of the household expenses will drop a little and your disposable income will rise slightly, therefore your payment will also increase ( unless an increase in expenditure is agreed to offset any rise).

But, in so far as the income is your wife's, none of it will be grabbed for the IVA

Charco_2

Yeah, discuss this again with your wife and your IP... and post on here too!

Your wife is under no obligation to pay towards your debt solution. When you calculate the household income and expenditure, you each should have a surplus... your surplus is what you offer towards your debt solution, your wife's surplus is her own. There is a grey area here because you obviously want to make an offer in your IVA that your creditors will find appealling/acceptable, but obviously you also dont want to be paying more than you need to of your wife's money. So while your wife can of course contribute to your IVA, she does not have to. Try to find a happy medium!

Trust me it's better to sort it out now in your favour rather than to make a committment you might want to change later.

the_bright_side

Thank you for your replies. Isn't that just semantics, if her money increases and then by default her contributions to the house raises freeing up some of my money which then goes into the IVA, then any increase in her wage really gets used to pay more into the IVA, unless she refuses to pay anymore towards household costs. I think my IP was concerned that my creditors woundt like my wife not paying more as I contributed to 80% of the household income as my wages are alot more than her.

FoggyBrain_2

Semantics it might be -- but the point is her wage is her wage. If she gets a raise and pays £20 extra towards the fixed (fixed ??? yeah!) expenses then, by default, you are paying £20 less, which can therefore be spared for the IVA payment. Whilst her proportional contribution towards expenses is taken into account, she is not obliged to pay anyhting towards your IVA directly.

Charco_2

Post up a copy of your I&E...

If you feel your wife can or should contribute then that is fine, but there is no legal obligation. Your creditors may ask for some of her surplus (it's likely she/your household benefitted from the debts when they were being run up) but that's part of the negotiation. Your creditors will take everything you are offering and ask for more, so don't offer them everything... You have to offer all of your surplus obviously but your wife's surplus is hers until she agrees to hand some over. Make sure to hold some back for her own debt commitments for example!

the_bright_side

Thanks all. My wife went BR to clear her debts and paid into an IPA for 3 years so she isnt happy about paying towards mine for the next 5 years. We have no assets.

Charco_2

So don't make her pay towards yours!

Propose the IVA based on your own surplus... With a top up from her surplus if you really need to make an attractive dividend! Your IP is going to be paid roughly 15% of realisations so obviously they're going to want all off your wife's surplus to be included - but whatever she offers is voluntary and out of her generosity, not because of any obligations! So keep her contribution small!

the_bright_side

Thank you. Say if we included my wife’s suplus now, as an offer of generosity and then in 6 months time she gets a new job / and or pay rise

1. Do I have to inform my IP of her new job, even if she refuses to give more generously (i.e no change to her contribution / change to IE)
2. The same at my annual review

Charco_2

Yes, any significant change in circumstances should be informed to your IP and tyhe appropriate action should be taken to address the situation. If your wife lost her job and you therefore didn't have some of her surplus to contribute then you'd want to/HAVE TO make changes so if your situation improves you should try to make the changes.

Remember, any improvement in her situation will have a knock-on effect on the household expenses!

It's not just semantics as you said before, and here i'll try to explain it more carefully!

Say for example (and i'm going to keep this simple - I hope - the figures will be rounded and possibly unrealisitic)

You earn £1000 a month and your wife earns £500... you therefore earn 2/3 of the household income (or 66.6%), your wife earns 33.3% of the household income.

Your household expenditure is £1,100... you pay 66% of this (£732) and your wife pays 33% (£366)

Your surplus then is £268 and your wife's surplus is £144 (the household surplus is £412 - your surplus is about 66% of this and your wife's surplus is about 33%)

You could offer £268 to your IVA and hope that your creditors find this an acceptable proposal... your IP will have some experience of what is acceptable or not and can advise you on that, but remember they'll also have some interest in insisting that your wife pays all her surplus to your debts too. Rmember, it is your proposal and so you can offer what you like - it's not up to your IP to accept it or reject it - consider what you think is reasonable and offer that.

Note that in your household I&E there are going to be some things which you as a family might like to have but wont be included (such as Sky TV, Gym subscriptions or a night out now and again) - these debts are yours and there's no reason why your wife shouldn't be able to afford these things from her own surplus. This is why you shouldn't offer all of her surplus! Your creditors can suggest some modifications to your proposal before it is accepted, their modifications are likely to include reasons why your wife should offer more money to your IVA but that's just part of the negotiation. Saying that she has other commitments should help to cut through that BS though (even if she repaid her debts in Bankruptcy last year or three years ago).

Now supposing she gets more work and her take home pay rises to £750.

The household income is now £1750, the household expenses might rise to £1,200 because she has to travel to work more and eat lunch at work etc and maybe have a babysitter an extra day or two

So the household surplus rises from £412 to £550 - YOUR SHARE of that surplus will change too. (You now have 57% of the household income and therefore about 57% of the surplus)
So YOUR SURPLUS is now £313 and your wife's surplus is around (43%) £237. (These changes are why you should always inform your IP about changes in circumstances - whether they are good or bad)

If you are offering all of your wife's surplus to your IVA then there is no incentive for her to find extra work or take on more hours.

Depending on how affordable an IVA is for you alone then I would suggest that obviously you will offer all of your own surplus to the IVA but that your wife (who does not HAVE TO contribute) might offer a small top up up of a figure you both consider affordable!

(Sorry if this is a bit rambly, I'm trying to answer two points: One that you should not offer all of your wife's surplus and Two why you need to inform your IP of changes)

the_bright_side

I can see clearly now, the rain has gone :-) Thank you Charco