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?

It is possible to stop and IVA if you are unhappy with the Arrangement. But you need to be aware of the implications.

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How to stop your IVA

You can stop your IVA after it has started if you wish. The agreement is legally binding on your creditors and they are not allowed to break it. However you can.

You might want to do this if you believe you picked the wrong debt solution. Alternatively, you may be no longer happy with your IVA company.

Whatever the reason, if you decide 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. Then, you need to inform your IVA Company. They may try to talk you out of your decision but ultimately they cannot stop you.

It will normally take between 3-6 months for your IVA to fail. You will then receive a letter from your IVA company confirming that the Arrangement has been terminated.

Struggling to get your head round all of this? We can help. Call us (0800 077 6180) or complete the form below. The advice is free and confidential.

What happens to the payments you have 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.

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.

Want advice about stopping your IVA? Call us (0800 077 6180) or complete the form below. It’s free and confidential.

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

    1. Jayne says:

      I had a business that i closed down, i was left with £7700 worth of debt, I was advised by an insolvency agency to get an IVA, in panic i signed this thinking it would help with my debt, (this was my debt and nothing to do with my husband, it was all in my name).

      I earned £200.00 per month so they said i had to pay £100 per month. My husband pays for everything with his wage. We sent an expenditure sheet to them, the bills have gone up since and we now have £63.00per month over and I’m paying them £100.00. I have been looking to get a full time job, but i have checked the paperwork and they will take 50% of anything i earn for the remaining four years.

      I seem to be in an impossible situation, please could you give me some advise. we live in a rented house, and my car is on finance. Is bankruptcy the answer? i worry and cry everyday about the mess I’m in. I did not realise i could have written to my creditors and offered them a payment.

      1. James Falla says:

        Hi Jayne

        As discussed in the article above it is possible to stop you IVA and chose an alternative option for dealing with your debt. Depending on the value of your car you might be able to consider a Debt Relief Order. However if the current second hand value is more than £1000 you will not qualify for this solution.

        You could also consider a Debt Management Plan but given you have little or no surplus income it will take you a long time to pay off what you owe using this option.

        Bankruptcy might be a sensible way forward. As you are a home owner you have nothing to lose. It is unlikely you would have to make further payments towards your debts so you would be debt free in 12 months. The only downside is the upfront cost which at the time of writing is £680.

    2. David says:

      I am considering leaving my IVA to separate my debts from my wife’s debt, going backrupt myself and looking for alternative debt relief plans for my wife. Is this possible?

      1. James Falla says:

        Dear David

        If you feel you would be better cancelling your IVA and dealing with your debts in a different way there is absolutely nothing to stop you doing this. If you chose you could then go bankrupt if you wish. Your wife could do the same or use an alternative solution.

    3. Roseanne says:

      I have signed my Iva but haven’t made a first payment yet, can I cancel and what will happen if I do?

      1. James Falla says:

        Hi Roseanne

        You can cancel your IVA at any time. If you have not yet made any payments that does not matter. Simply inform the IVA company you no longer want to go through with it and tell them to fail the arrangement. They cannot stop you and cannot charge you anything.

        If you do this your creditors will simply start chasing you again. As such you need a plan in place for how you will manage your debt going forward. Given you have decided that an IVA is not for you I assume you have put some thought into this already and have perhaps decided to go bankrupt instead. If you have no income or assets to lose then this is likely to be a sensible idea.

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