Pregnancy And Insolvency
Recently published figures estimate that the cost of rearing a child from birth to twenty one years of age can be up to 200,000. Let us suppose that you are in an IVA and become pregnant. The prospect of trying to sustain your IVA during your pregnancy and especially after the birth of your baby can be a daunting one. The undoubted joy of having a baby must be tempered with the reality that financial pressures will increase. Nevertheless, many debtors in IVAs have successfully overcome the challenges posed in these circumstances.
The first thing to understand is that your IVA will not inevitably fail just because you will be having a baby. Obviously, your fiscal position will certainly change - a few times - as a result of your having a baby, at the time of the birth, in the months after the birth and when you return to work, assuming that indeed you do intend to return to work. For a start, your income will reduce when you cease working. This of course depends on the terms of your work. Your contract might provide for your entire salary or a sizeable amount of it to be paid while you are on maternity leave. However, for most people, this will not be the situation.
Assuming you take maternity leave of nine months then your weekly maternity pay for the first six weeks of absence consists of 90% of your average gross income. Let us say that the amount you receive is X gross each week. Your average gross income is what you earned in the eight weeks immediately preceding the commencement of your maternity leave. For the remaining thirty three weeks of maternity leave, your weekly gross income is the lesser of X or 124.88, currently the legal maternity allowance paid out by the government. Notice that these sums are gross and are subject to taxes and national insurance deductions. As explained already, certain employers provide attractive alternate schemes relating to maternity leave but the norm is as mentioned above. When and if you go back to the job then your wages will normally revert to what you were making prior to your maternity leave. Your wages may also rise if you become entitled to claim tax credits or if you acquire an increase in your established tax credits. You should make an application for these straight away if there is any reduction in income. Tax credits may be paid out retrospectively to the time the application is made so it's vital to claim right away. Child benefit is also payable as soon as your baby is born so it is important to claim as soon as practicable.
Now let's look at expenditure. Your various expenses may increase or reduce but overall your expenses will 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 work. You will incur the new costs of clothing and nappies for your baby. When the period of maternity leave is over, other new costs may kick in such as the costs of a crche or other childcare, if you return to work. If you have extended family who are willing to assist, some of these new costs can be perhaps diminished somewhat.
There is no need to panic if you find yourself pregnant. Inform the supervisor of your IVA immediately you know so that your IVA can be adapted to your changing circumstances and properly supervised. It may be that your supervisor will authorize a temporary payment break or reduction in payments or otherwise seek to vary the terms of your IVA by agreeing variation proposals with your creditors. Although creditors have the final say, pregnancy should not be a barrier to a successful conclusion of your arrangement. To adapt an old saying - 'where there's (new) life, there's hope'.
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