IVA Pregnancy and SSP

carlos1973

My wife and I entered into an IVA in February and made an initial monthly payment and one more scheduled payment.
Unfortunately my wife became Ill and has been on SSP since 15th April, as yet her condition is undiagnosed - He hope to find out when/if she return to work next week.
We have been granted a payment break until October, but we are around £350 a week out of pocket. We have tried to get assistance, through Tax credits Housing benefit etc. but all we get told is we are not eligible due to last years earnings. We have had to move home as we could afford to keep our old house and had to move into a cheaper home, a great wrench but necessary as we save on rent, Council Tax etc.
In the meantime we have found out that we are 13 weeks pregnant. Even if my wife returns to work next week, she'll only be able to work for a few months before having to take Maternity Leave.
We dread to think how this will effect our IVA as at the moment we are struggling even worse that we were pre-IVA. Does anyone know how best to get advice on our situation, we find it hard to believe that as a couple we are expected to get by on £1100 a month, taking off bills and contractual obligations (Sky, BT Vodafone) we are left with £161 to eat with no assistance, we have been lead to believe that we will be able to get Tax Credits, Child Benefit next year but April is a long way of and we won't be able to get past October when the IVA payments start again. We really don't know what is going to happen or where to turn. Any advice is greatly appreciated. Thanks in advance.

sourcrates

Hi,
You are in a difficult situation it seems, are there any savings you can make in your budget ? its true you will get Tax credits/child benefit when the little one arrives, but that's a way off yet.
How much do you pay towards your IVA ?
If you cant manage on your present budget, you have the option of going back to your IP and requesting to lower your payments.
This would mean a creditors meeting been called to approve it, this is a straight forward procedure, which many people have to do, your situation is typical in that a lot of people have some kind of life event happen to them, and find they cant afford the IVA payments.
I would advise talking to your IP, it would not be in anyone's interest for your IVA to fail, I`m sure they will be able to help you out, but you need to tell them the problem.

longtermplanner

I am sorry because I know this isn't what you want to hear, but a pregnancy early in an IVA meaning the losss of an income is going to be a very hard problem to overcome. And with your wife being ill already, you have already 'used up' your payment break.

This must be a horrible and stressful situation for you both.

As you are renting, it may well be better if you considered going bankrupt instead of carrying on with this IVA. Why did you choose an IVA originally? There is an article here that compares IVA and bankruptcy: http://debtcamel.co.uk/hard-choices/iva-vs-bankrutcy/

£161 to eat

It's hard to comment without seeing your full Income & Expenditure, but if that is the amount your IVA allowed for groceries for the two of you, it is well below the CFS guidelines. Who is your IVA with? Were you allowed reasonable amounts for things like clothes?

carlos1973

Thanks for the replies.
To answer your questions:
We pay £126 a month.
An IVA is best due to my wives work and my desired career path (She could not continue if declared bankrupt and I could not be promoted to my desired level if declared)
Our IVA is with Harrington Brooks.
Our I&E allowed for food, healthcare, clothes leisure etc, even smoking! The £161 is all that is left after the bills to keep a roof over our heads.
We're planning to call our IP today once Doctors appointments are out of the way.

longtermplanner

Your wife and your jobs, do you mind saying what they are? A lot of people assume that they can't go bankrupt because of their work when actually they could.

Our I&E allowed for food, healthcare, clothes leisure etc, even smoking! The £161 is all that is left after the bills to keep a roof over our heads.

Are you saying that after paying rent, council tax, utilities etc you two only have £161 left to cover food, clothes, leisure etc? If so, that is completely unsustainable.

carlos1973

We are a hotel manager and a trainee supermarket manager.


Our income at the moment is £1100 a month. Our rent is £365, Council Tax is £100, BT £45, Vodafone £80, Gas & Electric £70, Water is £20, TV License £12, Sky £48, Bus passes £73. Add to this our IVA payment of £126 and we are left with £161 for EVERTHING else, not just food.


We have tried to cancel our contract with Sky and Vodafone, but have been told that we would have to pay cancellation charges etc. which effectively work out the same as continuing the contract!


We were able to make the payments and meet other outgoings etc. when my wife was at work but since she has been ill she only gets SSP, at £85 a week as opposed to around £450 a week.

longtermplanner

What are your total debts and what are your wife's?

How likely is it that you wife will be able to return to work soon?

What maternity pay provisions does her work have?

If your debts are each below £15,000 AND it is unlikely that your wife can return to work soon, then it may be that Debt Relief Orders for both of you would be a better solution than this IVA.

If your combined income would have been £2000+ when your wife was working, that IVA payment would have been reasonable. Unfortunately is is pretty low, so the chance of your creditors agreeing to reduce it a lot are not good.

I think you need to do a couple of complicated 'what if' calculations. Your 6 month payment break will take you through to the start of her maternity leave 11 weeks before the expected birth date I guess. At that point she will be getting maternity pay but no extra benefits for the as yet unborn child. Will you be able to afford the IVA payment then?

When the child is born, you will become entitled to child benefit and child tax credit, have a look what those will be when she is on maternity pay using this calculator http://www.turn2us.org.uk/benefits_search.aspx.

Her maternity pay will probably fall at some point, will you be able to afford the IVA payments then?

If you simply can't afford the IVA, then it is better to let it fail sooner rather than later.

If you owe to much for DROs to be possible, then you may need to look again at bankruptcy. Talk to you respective HR departments, people often worry uneccessarily about bankruptcy and their job. You can explain your situation, that you have tried for an IVA but your wife's sickness and now pregnancy mean it is impossible.

National_Debtline

Hi Carlos

In my job I hear lots of anecdotal evidence that suggests that while bankruptcy may work against you gaining a particular job, it won't necessarily mean you lose that job if you are already in post. Many employers can and will apply flexibility to their rules if they feel they would otherwise lose a proven and valued employee. In addition to your respective HR departments, you should also consult your union reps (if applicable).

This is an awkward situation, still, and it seems something may have to give. As things stand, the choice may boil down to:

sticking rigidly to your existing career plans with the debts in limbo for now; or

drawing a line under the debts and getting on with your lives, whatever line of work you end up in.

I guess it depends on what you value more, out of career fulfilment or the peace of mind that comes with being debt-free. It really is a personal choice and it's not for me to sway you either way. It is important though that the two of you are both happy with the route you take.

Kindest regards

Dennis
Twitter: @natdebtline

Brock_and_Roll

There must be something that can be done about the phone & TV charges - these total a whopping £2,076 or £176 a month when all that is really needed is just a basic phone/mobile/internet package at a fraction of the cost.

Do Sky/BT/Vodafone adopt a different approach if bankruptcy is looming/threatened? Would cancelling the payments held or hinder bringing these companies to the negotiating table?

And it goes without saying that if the OP is on say 10 a day, that is another £120 a month up in smoke!

It seems to me that without all this "discretionary spending" the budget would be bearable until the tax credits kick in etc

carlos1973

Thanks for the responses, although some are misinformed and judgemental. Thanks for knocking us when we are down. To explain / justify bear in mind the following:
I quit smoking in march, so I am not sending £120 up in smoke, although there are times when I would love to have a smoke to ease the stress and worry.
We have tried to cancel contracts, my wife's phone contract runs out in November and we are reverting to a sim only contract at less than half the cost and cheaper than payg.
Sky is due to end in January and we will move over to freeview when this happens. Sky told us that a cancellation fee of £176 pound would be charged plus admin costs, this is more than the remainder of the contract. What do suggest - We stop paying them and have Bailiffs knock on the door?
We moved house at the start of July, as we could not afford to stay in old house, saving over £200 a month in the process.
We have pruned away all excess costs that we can manage, our 'discretionary spending' amounts to whether we buy value food or reduced to clear food!
Our IVA allowed £20 a month for leisure activities, £15 for clothes, and £15 emergency money and other small amounts for car maintenance etc. These are all being ignored as we do not have said amounts.
The fact of the matter is that we are £1300 short each month, my wife has been signed off for another month at least!
I have a week off work on Holiday this week and I'll be stuck in the house as we cannot even work out what to eat from day to day let alone being able to do anything. I simply go to work every day, then come home and sleep my wife stays in the house and only leaves for doctors appointments.

longtermplanner

Just ignore the people posting that are missing the point.

Concetrate on what I and National Debtline says. If you can't afford your IVA then you have to choose between bankruptcy (possibly only of rone of you if one has the majority of the debt?) and a very prolonged DMP. Your finances are going to be complicated between your wife's ilness, then the various stages of maternity leave and child benefits. It's worth putting in the time to do lots of "what-if" calculations because these rae big decisions and not easy.

My instinct would be to put your wife's health first. That is more important than any money.