There may be various reasons why you want to stop an IVA. If you have made the decision to do so it is certainly possible. However it is important that you are aware of the implications.
- Why would you want to stop an IVA?
- Stopping an IVA if you are a Home Owner
- Implications if you are renting
- How to stop an IVA once it has started
Thinking about stopping your IVA? Give us a call (0800 077 6180) or complete the form below to speak to one of our experts
Why would you want to stop an IVA?
There are a number of reasons why you might want to stop your IVA. You may feel you choose the wrong debt solution. Having had time to reflect perhaps you believe an alternative might be more suitable.
It is possible that your circumstances have changed. Perhaps your IVA company has asked you to increase your monthly payments and you feel you are unable to afford this.
Alternatively your situation may have become worse and you are no longer able to maintain your payments. If a sensible agreement to reduce them cannot be reached you may be forced to stop the Arrangement.
Deciding to stop your IVA is not something you should undertake lightly. It could mean you will lose the money you have already paid in. You will also remain liable for your outstanding debts.
Stopping your IVA if you are a Home Owner
You may have heard that if you stop paying your IVA and allow it to fail your creditors will make you bankrupt. If you are a home owner this action would put your property at risk.
In fact even if there is considerable equity in your property it would be very unusual for creditors to force you into bankruptcy. This is because they lose control of the collection process and are unlikely to recover what they are owed.
Once they are informed that your IVA has failed they are much more likely to simply restart traditional debt collection activities against you. These could include employing debt collectors or applying for a CCJ.
If one of your creditors is HMRC they are likely to try and make you bankrupt if your IVA fails. Do not allow your Arrangement to fail without getting advice if you owe money to HMRC.
Implications of stopping an IVA if you are renting
Any rented property you are living in is unlikely to be affected if you stop your IVA. Your landlord was probably not aware that you were in the Arrangement in the first place and will not be told that it has failed.
However it is likely that you will still owe the same amount as when the Arrangement started. You will therefore need to put a plan in place for dealing with this. It is unlikely that any of your creditors will make you bankrupt.
As you have no property to lose you could consider making yourself Bankrupt. Alternatively you may feel a different option such as a Debt Management Plan or even starting a new IVA is better for you.
If your IVA fails you are still liable for all your outstanding debt. You must therefore have a plan in place to for dealing with this moving forward.
How to stop an IVA once it has started
If you have decided to stop your IVA the process is relatively simple. The first thing you need to do is cancel the payment you are making into the Arrangement.
You will then need to inform your IVA Company. They may try to talk you out of your decision but ultimately they cannot stop you from letting your IVA fail. They will normally require you to put your request in writing.
Your Insolvency Practitioner will write to you giving formal confirmation your Arrangement has failed. After this your name will be taken off the Insolvency Register.
Your IVA Company usually cannot fail your IVA until your payments are 3 months in arrears. As such if you are up to date you will have to wait up to 3 months for the failure to take place.
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