If you or your partner should become pregnant during the term of you or your partner’s IVA, it can be a worry that the reduced family income and the increased family expenditure may cause the IVA to fail because you may be unable to sustain the monthly contributions to your IVA. However, there is no need to panic. The first thing to do is inform your supervisor of the impending change to your circumstances. You know that your financial circumstances will change several times during the course of your pregnancy and after the baby is born.
When you go on maternity leave your income may reduce. You will also be faced with increased expenditure on a whole variety of items: medical care and medication, maternity clothing, baby food and clothing, nappies, baby cradles and buggies, heating bills and so on. However your supervisor can explain how the terms of your IVA may be adapted to your changing circumstances by authorizing temporary payment breaks or by seeking to vary the terms of the IVA with the agreement of your creditors. This is usually done by calling a meeting of your creditors, explaining the effects of your pregnancy on your income and expenditure and offering varied terms to creditors for their consideration and hopefully agreement. Creditors obviously have the final say, but pregnancy should not be a barrier to a successful conclusion of your IVA.
Looking at income first of all, it will usually decrease when you stop working, depending on the terms of your employment. While your contract may provide for your full salary or a significant portion of it to be paid while you are on maternity leave, for most people, this will not be the case. You of course have to decide on how much maternity leave you should take and indeed whether you intend to return to work. A further consideration which will affect your income while on maternity leave is whether you work for the public service or a private limited company.
For many people taking maternity leave of say nine months, maternity pay for the first six weeks of absence consists of 90% of your average gross income, reducing sharply thereafter for the remainder of the nine months. Average gross income is what you earned in the eight weeks prior to going on maternity leave and is subject to tax and national insurance deductions. You should be able to obtain precise figures as to your entitlements directly from your employer for the full duration of your proposed maternity leave. Some employers provide attractive alternative schemes relating to maternity leave. When and if you return to work then your income will usually revert to what you were earning before your maternity leave. Your income may also increase if you become entitled to claim tax credits or if you receive an increase in your existing tax credits. You should apply for these immediately there is any reduction in income. Tax credits may be paid retrospectively to the time the claim is made so it’s important to claim right away. Child benefit is also payable once your child is born so it is important to claim this as soon as practicable.
Looking at expenditure, your spending on various items may increase or reduce but overall your expenses will almost certainly increase. For example, the cost of foodstuffs will increase as you have another mouth to feed and of course heating costs are likely to go up. On the other hand there may be a temporary reduction in the cost of transport to and from work while you are off on maternity leave. New costs that you incur will include clothing and nappies for your baby. When your maternity leave is over and if you decide to return to work, other new costs may kick in such as the costs of a crèche or other childcare arrangements. If you are lucky enough to have an extended family living reasonably adjacent to you and who are willing to assist with childcare, you may be able to save on some of the childcare costs.
It is estimated that the cost of rearing a child from birth to twenty one years of age can be in the region of £200,000. If you are in an IVA and become pregnant the prospect of trying to sustain the IVA during the pregnancy and especially after the birth of the child can be a daunting one. The undoubted joy of having a baby must be tempered with the reality that there will be financial pressures to cope with. Nevertheless, many debtors in IVAs have successfully overcome the challenges posed in these circumstances.