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Are they really allowed to increase my IVA payments because my PIP increased?

Good evening. I entered into an IVA (individual voluntary arrangement) because I was in debt and due to being unable to work due to disability, I had defaulted on all my repayments. My IVA was agreed at £80 per month based on the financial report I gave them in January of this year.

I have just been awarded an increased amount of PIP (they added the mobility component) and have today been informed that my ESA is also going up because they have added two disability premiums to my claim. This is a significant increase in my incoming money and will make a HUGE difference to my life and health, as before I was only just scraping by.

Both claims were also backdated and landed me lump sum backdated payments of around £600 each.

I have contacted the company handling my IVA, and have been told they need to review my paperwork (which I expected), but they will be considering this an increase in income and penalising me accordingly (upping my monthly repayments and taking a percentage of my lump sums). Is this even legal? I pointed out to them that this was money meant to improve my quality of life and pay for any needs I have because of my disability.

They said that I would need to provide them proof that my outgoings had also increased enough for them to leave the majority of my extra money alone, but I have no idea how to do that because I've not had the money before, so I have no proof of how I'd use it, plus my disability is very complex (especially because a large portion is psychological) and constantly fluctuating in severity.

How am I meant to be able to explain to them and have them accept that I need a portion of that money for self care purposes to increase my mental well-being, when they would consider anything involved a "luxury"? I don't understand how they can be legally allowed to take ANY of this money, but hopefully someone can tell me what's allowed, and how I can address/fight this!

Replies

  • magunra2kmagunra2k Member Posts: 43 Connected
    The simple answer is yes it is legal, but it really would depend on what has been outlined in your IVA agreement, if they have made a provision for an increase in income then it will be outlined in your IVA document, basically if you are doing better financially they will expect you to increase your payments to your debtors.
    It may seem harsh and without knowing your entire circumstances its not easy to comment about what you can do, i would expect they will go after the lump sums in their entirety and a percentage of the increase in benefits.
    What you can do about it is try and work out a way to justify why your increase in benefits needs to stay with you, if as you say you are scraping by then its quite likely that the IVA is far too harsh and should never have been proposed, again without knowing your circumstances its difficult to say, but from what you have said and your current position i think insolvency may have been a better direction. 
  • MatildaMatilda Member Posts: 2,616 Disability Gamechanger
    @Cassandra

    I don't think they can go after your PIP itself because PIP is not income but an allowance to help with the effects of your disabilities.
  • magunra2kmagunra2k Member Posts: 43 Connected
    Matilda said:
    @Cassandra

    I don't think they can go after your PIP itself because PIP is not income but an allowance to help with the effects of your disabilities.
    It would still legally class as income, it may not count as a wage, but the result is still the same, Cassandra will still have more money, the Debtors wont care how that money came about, they will still want an increased payment unless she can prove that her circumstances in terms of expenditure have changed, which as she said is impossible as she has just had the increase awarded.

    Without seeing the IVA agreement, its really not possible to say what will happen,but in most IVA agreements there is usually a clause to ratchet up payments if the Person has a change of personal circumstances in terms of a increase in money, though rarely do they include a clause to help the subject of the IVA if they fall on hard times, dont forget the IVA supervisor is actually working on behalf of the people who are owed money and they have a duty to maximise the payment of the debt. 

    realistically you're at the mercy of the debt until the IVA is discharged in however many years it has left to run, IVAs have been growing in popularity since the rules changed on Insolvency and companies having to shoulder more responsibility for people running up debt that they could never afford.

    it maybe worth considering approaching a legal debt specialist or the citizens advice , to check to see where you stand with the IVA, it maybe possible that the IVA you agreed to was not fit for purpose, in which case it maybe able to be scrapped and started again using your new level of benefits.

    but please talk to a professional 
  • BenefitsTrainingCoBenefitsTrainingCo Member Posts: 2,692 Pioneering

    Hi @Cassandra

    Whilst this is not strictly a benefits issue, on a broad level of speaking, @magunra2k is unfortunately quite right.

    Nearly all income, including disability benefits, normally will be accounted for, and increases in income only mean increases in payments on the IVA. However do speak to the person administrating the IVA, as if you have been 'scraping by' then make sure that additional needs arising from your disability are being met - for example needing taxis or special dietary requirements.

    I also second @magnura2k in their advice that you should seek help from a debt specialist -  as they may be able to give you a better idea of what you could argue as reasonable expenditure in light of your disabilities. The Citizens Advice have a webpage on the subject https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/individual-voluntary-arrangements/managing-your-iva/circumstances-have-changed-individual-voluntary-arrangements/ and I understand they have debt advisers on webchat during the day.

    Hope this helps.

    Kind regards,

    Mary

    The Benefits Training Co:
    Paul Bradley
    Michael Chambers
    Will Hadwen
    Sarah Hayle
    Maria Solomon
    David Stickland
  • MatildaMatilda Member Posts: 2,616 Disability Gamechanger
    @Cassandra

    You could try National Debtline for advice.
  • CassandraCassandra Member Posts: 4 Listener
    edited October 2017
    Wanted to report back because I finally got some contact from them today. I figure the following info might be of interest to anyone else in my position!

    So regarding the PIP - they are counting it as income, but immediately off-setting it as an expenditure to cover disability requirements. This includes the lump sum back-payment I got.

    Regarding my ESA - because that IS a form of income support, they have recalculated my repayments solely based on THAT increase, which is only setting me back an extra £50 a month, so I am still markedly better off. They've also left alone my ESA lump sum too. This was a far better outcome than I was expecting.

    I have my annual financial review with them in December, and if I can prove that my expenditures are enough, I might be able to claw back some of that ESA money - but if I don't I'm certainly not going to feel hard done by.

    So yeah, for anyone reading this who might fall into a similar situation, don't despair - just be very clear in your correspondence with them so they have all the information they need to make a correct call.

    Thanks to all for your input.
  • MatildaMatilda Member Posts: 2,616 Disability Gamechanger
    edited October 2017
    @Cassandra

    It's likely that National Debtline would have told you the same about PIP - that it would count as money to be spent on disability needs.

    I'm pleased that you don't have to pay any of your PIP under your IVA.
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