Your employment circumstances can also affect how much you pay into an IVA. If your income increases, you receive a bonus or commission, or you become unemployed during the arrangement, you may need to tell your Insolvency Practitioner.
This guide explains how an IVA can affect your current job, applying for a new job, self-employment, bonuses, redundancy and your employer's ability to find out about your IVA.
On this page
- Will an IVA affect my job?
- Which jobs can be affected by an IVA?
- Can an IVA breach my employment contract?
- Can I get a new job with an IVA?
- Will my employer find out about my IVA?
- Can an employer check my credit file?
- What happens if my income increases?
- What happens to overtime, bonuses and commission?
- What happens if I am made redundant?
- What happens if I lose my job during an IVA?
- Can I be self-employed with an IVA?
- Do I need permission to change jobs?
- Frequently Asked Questions
Will an IVA affect my job?
For most people, an IVA will not affect their employment.
There is no general rule that prevents someone with an IVA from working. You can normally continue in your existing job and receive your normal salary while making the agreed IVA payments.
However, some jobs and professions have their own rules about insolvency. These can apply particularly where your role involves managing money, handling client funds or holding a position of financial responsibility.
If you work in a regulated profession or your employment contract contains restrictions relating to insolvency, check the rules before entering an IVA.
Which jobs can be affected by an IVA?
Some occupations have specific restrictions or professional requirements that can be affected by an IVA.
Examples can include certain roles in:
- financial services
- banking
- accountancy
- legal services
- property and conveyancing
- other roles involving significant financial responsibility.
There is not, however, a single list of jobs that everybody with an IVA is prohibited from doing. The rules depend on the particular profession, regulator, employer and role.
For example, some professional bodies may require members to disclose an IVA or may impose conditions on practising. Other employers may have internal policies concerning insolvency.
This is why you should check the rules that apply specifically to your job rather than assuming that an IVA will automatically prevent you from working.
If your job is regulated, contact the relevant professional body before entering an IVA and ask whether an IVA affects your ability to practise.
Can an IVA breach my employment contract?
Your employment contract may contain conditions relating to insolvency, bankruptcy or financial conduct.
If it does, entering an IVA could mean that you have to tell your employer or that certain restrictions apply to your role.
Check your contract, staff handbook and any professional rules that apply to your position.
If you are unsure, you can ask your HR department or professional body for clarification before entering an IVA. You do not necessarily have to tell them why you are asking.
This is particularly important if you work in a position where financial integrity or responsibility is an important part of the role.
Can I get a new job with an IVA?
In most cases, yes. An IVA does not generally stop you from applying for or accepting a new job.
However, an employer may have its own recruitment requirements. Some employers, particularly those recruiting for financially sensitive roles, may carry out financial or credit checks.
If a potential employer carries out a credit check that shows your IVA, you may need to explain your circumstances depending on the requirements of the role and the employer.
It is therefore sensible to check whether the position has any insolvency or financial suitability requirements before accepting the job.
Will my employer find out about my IVA?
Your employer is not normally notified automatically when you enter an IVA.
However, an IVA is recorded on the Individual Insolvency Register while it is active. The information is publicly available, so an employer could potentially discover it if they searched the register.
An employer could also become aware of an IVA if you are required to disclose it under your employment contract or professional rules, or if they carry out an appropriate financial check.
For most ordinary jobs, an employer is unlikely to have a reason to search the Individual Insolvency Register simply because you have an IVA.
Can an employer check my credit file?
Some employers carry out credit checks as part of their recruitment process, particularly for positions involving money, financial responsibility or sensitive information.
A credit check is not a routine requirement for most jobs.
If an employer wants to carry out a credit check, they generally need your permission. You should therefore be told if a financial check forms part of the recruitment process.
An IVA normally remains on your credit file for six years from the date it starts. This means it can potentially be visible to an employer carrying out an appropriate credit check during that period.
A credit check does not necessarily mean you will be refused the job. The employer will decide how any information revealed by the check affects your suitability for the particular role.
What happens if my income increases during an IVA?
An increase in your income can affect the amount you pay into an IVA.
Under the current IVA Protocol, you must tell your Supervisor about relevant changes in your income. This can include additional sources of income and certain increases resulting from overtime, bonuses or commission.
Your Supervisor will review the change and determine whether your IVA contributions need to change.
This means that getting a pay rise does not automatically cause your IVA to fail. However, you should not assume that you can simply keep all of the additional income without telling your Supervisor.
The exact treatment depends on the terms of your IVA.
What happens to overtime, bonuses and commission?
If you receive overtime, a bonus, commission or similar additional income during a protocol IVA, you may need to disclose it to your Supervisor.
The current IVA Protocol provides specific rules where additional income exceeds 10% of your normal take-home pay. You must disclose the relevant amount within 14 days, and 50% of the additional amount above the 10% threshold is generally payable into the IVA.
Not every IVA necessarily follows exactly the same terms, so check your own proposal and speak to your Supervisor if you receive additional income.
Never assume that a bonus, commission payment or overtime can simply be kept without informing your Insolvency Practitioner.
What happens if I am made redundant during an IVA?
Being made redundant does not automatically mean that your IVA will fail.
However, you must tell your Supervisor if you receive notice of redundancy. The current IVA Protocol requires you to notify your Supervisor within 14 days and provide details of any redundancy entitlement.
Under the Protocol, redundancy compensation above six months' net take-home pay is generally paid into the IVA, while the treatment of your income and remaining redundancy funds will depend on your circumstances and the terms of the arrangement.
If you lose your job, your Supervisor can review your circumstances and consider whether your IVA payments can be changed or temporarily suspended.
The important thing is to contact your Supervisor as soon as your employment situation changes rather than simply missing payments.
What happens if I lose my job during an IVA?
If you become unemployed while you are in an IVA, tell your Insolvency Practitioner or Supervisor as soon as possible.
Unemployment can significantly change your ability to maintain the agreed monthly payment. Your Supervisor can review your new income and expenditure and discuss the options available.
Depending on your circumstances and the terms of your IVA, this could include a temporary payment break or a formal variation of the arrangement.
The current IVA Protocol specifically allows for payment holidays in certain circumstances where an unexpected reduction in income means that you cannot make the full contribution.
Do not simply stop making payments without speaking to your Supervisor. Missing payments without an agreed solution could put the IVA at risk.
Can I be self-employed with an IVA?
Yes. An IVA does not generally prevent you from being self-employed.
However, self-employed people need to be particularly careful about keeping their Supervisor informed about changes in income and financial circumstances.
If your income changes significantly, your contributions may need to be reviewed. You may also need to provide financial information as part of your annual review.
If you are considering becoming self-employed while in an IVA, speak to your Supervisor beforehand so you understand how the change could affect your arrangement.
There can also be additional considerations if your business requires you to obtain credit, particularly because the current IVA Protocol generally requires written approval before obtaining credit of more than £500, subject to specified exceptions.
Do I need permission to change jobs during an IVA?
Changing jobs does not normally require permission simply because you have an IVA.
However, you should tell your Supervisor about a significant change in your employment or income because it may affect your IVA payments.
If your new job pays more or less than your previous job, your income and expenditure may need to be reassessed.
If the change in employment also involves receiving a redundancy payment, compensation or another lump sum, you should tell your Supervisor about it immediately.
Can I be refused a job because I have an IVA?
Having an IVA does not automatically mean that an employer can refuse to employ you.
However, some jobs have specific financial suitability requirements. An employer may also consider information revealed by a lawful financial check where this is relevant to the role.
This is more likely to be an issue for jobs involving significant financial responsibility, access to client money or regulated professional activities.
If you are applying for a role in one of these areas, check the employer's requirements and the relevant professional rules before entering an IVA.
Frequently Asked Questions About IVAs and Employment
IVA and Employment: What Should You Do?
For most people, having an IVA does not mean losing their job or being unable to find employment. The main concerns are usually limited to certain regulated professions, employment contracts and roles involving significant financial responsibility.
If you are considering an IVA, check your employment contract and any professional rules that apply to your role before you commit.
You should also remember that your employment can affect your IVA. Changes in salary, bonuses, overtime, commission, redundancy or unemployment should be discussed with your Insolvency Practitioner or Supervisor.
An IVA is a legally binding debt solution and should only be considered after you have looked at the alternatives. Read our guide to how an IVA works and the pros and cons of an IVA before making a decision.
You can also read about IVAs and car finance, renting with an IVA and what an IVA means for your home.
