Money Advice, Debt Advice & Debt Help
Can you stop your IVA if you are Unhappy?

Can you stop your IVA if you are Unhappy?

Can you stop your IVA if you are Unhappy?

There may be various reasons why you want to stop an IVA. It is possible to do so if you wish but you need to be aware of the implications.

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Why would you want to stop an IVA?

There are a number of reasons why you might want to stop your IVA. You may simply feel you picked 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.

Whatever the reason you can stop your IVA if you wish. The agreement is legally binding on your creditors and they are not allowed to break it. However you can.

Although an IVA is a legally binding agreement you can decide to stop paying and use a different debt solution if you wish.

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. In fact even if there is considerable equity in your property it is very unlikely they would take this action.

The reason is they would lose control of the collection process and are unlikely to recover what they are owed.

As such if you stop the Arrangement they are much more likely to simply reinstate 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.

What Happens to any IVA Payments you already made?

When you stop an IVA much of the debt you had at the start is likely to remain outstanding. This is because your IVA company is allowed to deduct their fees and costs from the payments you have already made.

If the payments you have been making each month are only £100/mth or less it is very likely that all of the money will be taken in fees. Your original debt will only have reduced if your payments were much larger.

Given this you will need to put a new plan in place for dealing with your debt. Depending on your circumstances you might consider starting a new IVA. Alternatively if you are not a property owner or have no equity in your home going bankruptcy could be the fastest way to become debt free.

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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    52 thoughts on “Can you stop your IVA if you are Unhappy?

    1. Tommy says:

      Hi James,

      I’m in IVA for 3 years already (started in January 2018) without any problem, i just had the annual review this week. During this lockdown situation i received 80% of my wage i would say i was losing hundreds of pounds since March. I was able to work for 5 weeks after my company reopened in October. There was plenty of work to do incl overtime as well which put me on for a quiet good salary. But in the last 4 weeks i also started doing a side job where i got weekly salary as well approx £250/week.

      So, as my IP have seen my October wage from my full time job plus this extra 3x£250 on my bank statement he increased my monthly contribution from £130 to £434. Really??? Till the end of my agreement which is another 24 month. I told him that i lost hundreds of pounds during the lockdown and always kept on the payments and i’m only able to do this side job until my company can reopen again but nothing happen so my next payment will be £434.

      I know he can see those extra income per week but that isn’t guaranteed for every week and if i can go back to my normal work i won’t get this extra earn.
      What can i do?

      1. Hi Tommy

        Unfortunately your IVA company is required to increase your payment if your surplus income goes up as a result of an increase in your income. As such based on your current overtime and the fact you have started an extra job, you have to expect increased payments.

        If you plan to stop your 2nd job and you feel the extra overtime you have been doing will stop in the near future, then you may be able to persuade your IVA company to suspend the increase and review again in say 2 months. However if you are going to continue earning more into the foreseeable future, the increase will remain I am afraid.

        I suggest you speak to your IVA company, explain the situation and tell them that your additional income is not guaranteed. They may agree to suspend the increase. If you are unable to agree a way forward with them, the only other option would be to cancel the whole IVA and do something else. However given you have paid for 3 years already I suggest this is an absolute last resort.

        If you want to chat your options through, by all means give me a call (0800 077 6180)

    2. Trevor S says:

      Hi I have a question relating my nephew who has signed an iva but now questions his debts listed, he has limited capacity despite being quite bright. is it possible to obtain a detailed report of debts, ie when, what and with whom showing price of original purchase

      1. Hi Trevor

        The only way your nephew can get a list of his creditors is by getting a copy of his credit file. He simply needs what is known as a statutory credit file which is free.

        The IVA company your nephew is working with would have complied their list of his creditors by accessing his credit file themselves. So it would be a useful exercise to do so you can compare the two.

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