Stop your IVA and go Bankrupt

Stop your IVA and go Bankrupt

Are you struggling with your IVA? If you think you are in the wrong solution you could stop your IVA and go Bankrupt.

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Want help to stop your IVA and go Bankrupt? Give us a call (0800 077 6180) or complete the form below to speak to one of our experts

Can you stop an IVA once it has started?

There may be a number of reasons why you decide to stop your IVA and go bankrupt. Your circumstances may have changed and you are now struggling to make your payments. Alternatively you may simply feel that it is not the best solution for you.

Although it is a legally binding agreement you can stop the Arrangement at any time if you want. All you have to do is stop making the monthly payments. You can do this be cancelling the standing order or payment authority to your IVA company.

Once you are three months in arrears and in the abscence of any other agreement with the company they will fail the Arrangement. You will be issued with a written termination notice.

If you are struggling with your payments talk to your IVA company. It may be possible to reduce them or take a payment break if the problem is only temporary.

What are the implications of going Bankrupt?

After your IVA has failed you can then go bankrupt if you wish. If you have no disposable income you will not have to make any further payments towards your debts.

If you have disposable income you will still have to pay this towards your debts for three years. As such if you have less than 3 years of your IVA left it may be better to stick with it unless you simply cannot afford to do so.

You can keep your car if you go Bankrupt as long as it is worth £1000 or less. If it is worth more you may have to sell it and get a cheaper one.

Before stopping your IVA speak to us about how bankruptcy will affect you. It is important to understand all the implications before making your decision.

What if you are a Home Owner?

If you own a property you may be worried about what will happen to it if you stop your IVA and go bankrupt. In fact your property may not be at risk. However it is very important to understand whether it will be or not.

Where there is little or no equity in your home it is unlikely to be at risk. The Official Receiver (OR) will not be interested in selling it if there is no financial benefit in doing so.

However if there is equity this is likely to be more of an issue. The OR will need to release this value in some way. In this situation sticking with your IVA may be the best option if possible.

If you have no equity in your property it may not be at risk if you go bankrupt. However you MUST get advice from us before making a decision to stop your IVA.

What happens to the money already paid into your IVA?

If you stop your IVA the money you have already paid in will not be returned to you. What happens to it will depend on how much you were paying and how long you were in the Arrangement.

Your IVA company is allowed to use any money you have paid to settle any fees and costs they have already incurred. After this any money left over will be paid to your creditors.

For this reason if you were paying £100 a month or less and have only been in the Arrangement for a year or two most if not all of the money paid in is likely to be taken in fees. Your original debt will not have reduced at all.

Thinking about stopping your IVA? Want to know if bankruptcy is the right option for you? Contact us to discuss your options (0800 077 6180).

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22 thoughts on “Stop your IVA and go Bankrupt

  1. MR S says:

    Hi I am in my third year of my Iva , I currently pay £200 per month. I do however have debt that was not included in my Iva. I pay a further £200 to this so a goal of £400 per month I just can’t meet these payments anymore.

    I have 3 children and partner my surplus income with the Iva is £200 a month hence why I pay this to the Iva. I am considering bankruptcy to get these payments reduced will I still have to pay £200 per month to the bankruptcy for 3 years as it’s what the Iva views as my surplus income ?

    1. Hi Mrs S

      You seem to be in a crazy position. Clearly there is no way you can maintain your £200/mth IVA payment plus additional debt payments of another £200/mth. Have you spoken to your IVA company about this additional debt? One option might be to add it into the Arrangement. If the alternative is you terminating your IVA and going bankrupt your IVA company might well try to help.

      If the extra debt cannot be added or you cannot agree a way forward with your IVA company then stopping your IVA and going bankrupt would be a sensible option to consider (assuming you are not a home owner). Whether or not you would have to make ongoing monthly payments depends on whether you actually have any disposable income or not. The fact you have been paying £200/mth into your IVA is not relevant.

      The official receiver will take a revised view of your income and expenses budget. If in reality your disposable income is less than £200/mth your payments would reduce. If in fact you have no disposable income you would not have to make any ongoing payments at all.

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