Childbirth and Insolvency

Recently published information estimate that the expense of rearing your child starting from delivery to twenty one years of age could be up to a whopping £200,000. Lets assume that you're in an IVA turn out to be pregnant. The issue of trying to manage your IVA during your pregnancy and particularly after the delivery of your little one is definitely a problematic one. The undoubted happiness of having a new baby has got to be tempered with the simple fact that financial challenges may very well escalate. Nevertheless, plenty of individuals in IVAs have effectively mastered the obstacles posed in these kind of scenarios.

The first thing to realise is that your IVA will not automatically fail merely because you will be having a baby. Obviously, your budgetary position is going to alter - a few times - in the course of your carrying a child, at the time of the birth, in the months after the birth and when you return to work, in the event that indeed you do plan to return to work. For a start, your earnings will reduce when you cease working. This of course is based on the conditions of your employment. Your contract may perhaps provide for your entire wage or a substantial part of it to be paid while you are on maternity leave. However, for most people, this will not be the case.

Assuming you take maternity leave of nine months then your weekly maternity pay for the first six weeks of absence is comprised of 90% of your average gross income. Let us say that the amount you end up with is £X gross each week. Your average gross income is what you earned in the eight weeks immediately preceding the start of your maternity leave. For the other thirty three weeks of maternity leave, your weekly gross income is the lesser of £X or £124.88, presently the statutory maternity allowance paid by the government. Be aware that these sums are gross and are subject to taxes and national insurance deductions. As pointed out previously, various employers have solid alternative schemes relating to maternity leave but the norm is as mentioned above. When and if you return to the job then your salary will usually go back to what you had been earning prior to your maternity leave. Your income may also rise if you become eligible to get tax credits or if you are given an increase in your existing tax credits. You should make an application for these right away if there is any decrease in salary. Tax credits may be paid out retrospectively to the time the claim is made so it’s vital to claim right away. Child benefit is also payable as soon as your infant is born so it is important to claim as soon as practicable.

Now let’s look at expenditure. Your various expenditures may increase or diminish but on the whole your expenses will grow. For example, the cost of foodstuffs will grow since you have one more mouth to feed and of course home heating costs are most likely to go up. On the other hand there may be a short-term decrease in the cost of transport to work. You will bear the additional costs of clothing and diapers for your infant. When the duration of maternity leave is over, additional new costs may kick in such as the costs of a crèche or other sorts of childcare, if you return to employment. If you have extended family who are agreeable to assist, some of these new costs can be perhaps reduced somewhat.

There is no need to panic if you find yourself expecting a baby. Advise the supervisor of your IVA immediately so that your IVA can be modified to your changing circumstances and be well supervised. It may be that your supervisor will approve a temporary payment holiday or decrease in payments or otherwise look to change the conditions of your IVA by agreeing variation proposals with your lenders. Although creditors have the final say, being pregnant should not be a barrier to a successful ending of your arrangement. To adapt an traditional saying - ‘where there’s new life, there’s hope'.