Changes and variations

What is a variation?

A variation is a formal modification to the terms of your IVA. Because an IVA is a legally binding agreement, its core terms cannot be changed by agreement between you and your Supervisor alone. A variation requires the consent of your creditors, in the same way the original proposal did.

When a variation is needed

Not every change requires a formal variation. Minor adjustments — such as a small payment change following an annual review — can often be handled by the Supervisor under their administrative powers. A formal variation is typically needed when your monthly contribution needs to decrease significantly for an extended period, there is a significant change in the overall amount creditors will receive, you wish to extend or reduce the duration, there has been a fundamental change in circumstances (loss of employment, serious illness), or you wish to make a full and final settlement offer.

The variation process

If a variation is needed, your IP will prepare a Variation Proposal setting out the proposed modifications and reasons, sent to creditors along with your current I&E statement and evidence of the change. Creditors then vote using the same decision procedure as the original approval — at least 75% by value of those voting must agree. The process can take several weeks. During this time, your Supervisor may informally accept a reduced payment pending the outcome. Confirm the position with your IP in writing — do not assume the variation has been approved.

Creditor vote on a variation

Creditors receiving a variation proposal may approve it as proposed, approve subject to modifications, or reject it. As with the original vote, creditors who do not respond are excluded from the calculation. Only those who actively vote are counted.

If the variation is rejected

If creditors do not agree to the variation, the original terms remain in force. Options may include attempting a revised variation with different terms, making a full and final settlement offer if you have access to a lump sum, or allowing the IVA to fail and considering alternative options including bankruptcy. Your IP should advise on the most appropriate course of action.

Supervisor discretion

Many IVA proposals give the Supervisor discretion to deal with minor changes without a full variation — for example, granting a short payment break of up to three months. The extent of this discretion varies by proposal. If you are in short-term difficulty, speak to your IP first about whether they can help under their existing powers before a formal variation is considered.