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Can you settle an IVA early?
Money Advice, Debt Advice & Debt Help

Can you settle an IVA early?

Can you settle an IVA early?

A monthly payment IVA normally lasts 5-6 years. However it may be possible to settle the Arrangement early if a lump sum can be raised.

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How to settle an IVA early

Once a monthly payment IVA starts it usually continues for at least 5 years. It is however possible to reduce this period. The Arrangement can be settled early with a lump sum.

While the Arrangement is running you can offer to pay your creditors a one off cash payment. In return they then agree that no further monthly payments will be required.

Once the cash is handed over the Arrangement is completed. The outstanding debt is written off and you are no longer bound by its terms.

Settling your IVA early means you have no further annual reviews of your circumstances. In addition any subsequent increases in income or windfalls you receive are yours to keep.

How much cash is needed to settle an IVA early?

The key question is how much cash will be required to settle the IVA. There is no one answer to this. The amount required is different in each case and will depend on your specific circumstances.

As a rule of thumb you will need to pay an amount equal to the total of your outstanding monthly payments. So for example if you are paying £200/mth and have 24 months to go you would need to offer £4800 (£200 x 24).

You circumstances may have changed meaning you are no longer in a position to maintain your IVA payments. In this situation your creditors may be prepared to accept a lower amount.

The amount required to settle your IVA must first be agreed with your IVA company. Most will consider a sum equivalent to your outstanding payments. However others may demand more.

Where can the money you need come from?

The cash required to settle your IVA early can come from a number of places. However it cannot be money that your creditors would normally be entitled to.

As such, the most common source is a gift or loan from a family member or friend. Money offered in this way is only available to your creditors to settle your Arrangement. In the absence of such an agreement they would not be able to get their hands on it.

If you are a home owner it may be possible to release equity from your property. If you can raise cash in this way your creditors will often be prepared to take this to settle the Arrangement immediately

Remortgaging to settle an IVA will require the assistance of a specialist broker. Call us (0800 077 6180) or complete the form below for help with this.

Can you use a Windfall to settle your IVA?

If you receive a windfall during your IVA it will normally have to be paid into the Arrangement in full. The injection of the extra funds does not reduce length of the agreement and you have to continue making your payments.

That said some windfalls can be used to to settle an IVA early in specific circumstances. One example of this is a redundancy payment. If you lose your job you may be able to offer the redundancy money you have received to settle your Arrangement.

However this will only be the case if it is clear you will be unable to get a new job (perhaps due to ill health or your age). Where you can get back into employment it is very different. You will be allowed to keep some of your redundancy money to maintain your living expenses and IVA payments. The rest will have to be paid into the Arrangement.

It is not usually possible to settle an IVA early after receiving a windfall. This money usually has to be paid into your Arrangement on top of your normal monthly payments.

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138 thoughts on “Can you settle an IVA early?

  1. Shannon says:


    So my partner is in a IVA and has another 2 and half years to go. His parents have proposed a sum of £10,000 to pay off the debt. If this wasn’t offered to us and his monthly payments stay he same the IVA would get about £13,000.

    We are so desperate for him to get out of the IVA so we can start saving some proper money as I’m doing all the saving atm. And even though an IVA is good it can be so tough and limiting.

    The meeting with his creditors are in a few weeks. Obviously there no no guarantee but what do you think the likely hood of them excepting the offer will be? Given your knowledge and experience.

    Thank you

    1. Hi Shannon

      If your partner’s IVA company has agreed to put the settlement offer of £10k to his creditors then I would be pretty confident it will be accepted. The IP will only put their name to the offer if they are pretty sure of success. Please do let me know how you get on.

  2. Shannon Sheppard says:

    Hi James it shannon. So good news they accepted the the figure we offered. They also brought the figure down as he made last months payment. We are over the moon. Just another question. Will the IVA still be on his credit file for the 6 years still or does it change now the agreement is less?

    1. That is brilliant news Shannon. I am very pleased to hear it.

      Even though his IVA has been settled early the record will still remain on your partner’s credit file for the full 6 years from the start date. It will then come off automatically. Unfortunately there is nothing that can be done to speed this up.

      There are things he can do to start to repair his credit rating in the mean time. However if you are thinking about getting a mortgage in the future this will be possible. However you will have to wait until the record has come off his file or it is 3 years from the date of completion which ever is the sooner. But at least this give you time to save for a deposit.

      If you are looking to get a mortgage in the future please let me know and I can assist.

  3. Chantelle says:

    Hi i have started an iva 7months ago now, my uncle wants to pay it off for me, even though i am paying off within 12months, will it still remain on my account for 6years?

    1. Hi Chantelle

      Yes. If you pay off your IVA early the record will still remain on your credit file for the full 6 years. Settling early does NOT in itself improve your credit rating in any way. Once the agreement is settled and you have your completion certificate there are things you can do to improve your credit score. However the record will remain and things like getting a mortgage will remain very difficult until the 6 years is up and the record comes off at that time.

  4. Alexa says:

    Hi there, I have been in an Iva for a little over 10 months. My brother has offered me the remainder in full £17,500. Would It be possible to do this as early as 10 months in? Thank you.

    1. Hi Alexa

      It all depends on the terms and conditions of your Arrangement. Some IVAs have clauses saying that settlement offers will not be considered within the first 18 months. However if you are looking to pay the remainder of the balance in full I would of thought most IVA companies would want to help you. You will need to speak to your company and ask them.

      Please let me know how you get on.

  5. Brian says:


    I started my IVA April 2018 paying £350 a month. I have made 20 payments so far £7000. My Total Unsecured Debt is £41,436.00

    I have just been made redundant and I have offered £14,350.00 to the creditors (Early Payment), is this figure too low and what are my chances or options?

    1. Hi Brian

      Whether or not you can settle using all or part of your redundancy money will depend on the terms and conditions of your IVA. Normally these will state that you can’t simply use the money to make an offer to settle.

      As standard you will be allowed to keep the equivalent of 6 months of your normal take home pay. Any excess will have to be paid into the IVA. Then with the lump sum you retain you maintain your living expenses and the ongoing IVA payment. If you get a new job you then continue paying your IVA as normal. If by the end of the 6 months you have not found a job you can take a further payment break or the IVA might have to fail.

      The only time your IVA company will entertain the idea of taking a lump sum from your redundancy money to settle in full is if it is clear you will have little or no prospect of getting another job.

  6. Stephanie odlum says:

    My grandmother has offered to pay my remaining monthly contributions as a lump sum so I can exit my IVA early. However the funds are from a joint account with my grandad but my grandfather is no longer alive. Would this be a problem when providing proof of funds and ID so they can do there checks?

    The money in the account is not from inheritance as it was in the account before my grandfather passed away. I don’t want to risk it if they see this as inheritance. Even though nothing has been Inherited as it is a gift from my grandmother.

    Thank you in advance

    1. Hi Stephanie

      To answer your first question I can’t see there being a problem with providing the proof of funds. You would simply need to explain that one of the account holders is no longer alive and so only the ID of the other can be provided.

      In terms of the question of inheritance this should not come up. These are funds owned by your Grandmother in her account. I assume she retained full ownership of them after your Grandfather passed away. Given you did not personally inherit the funds then there is nothing to worry about.

  7. Emma says:


    Unfortunately I lost my mother at Christmas. I along with my daughter will get some inheritance money.

    Now I took an iva out last sep so still a long way to go. Do I have to inform the company right away about the money I’m inheriting? Until everything has been settled with probate I’m not sure the sum I will be receiving.

    I would also want to pay it off as well but read somewhere they wont allow you to do so with inheritance money.

    1. Hi Emma

      Sorry to hear about your Mother.

      You will have to tell your IVA company about the inheritance you receive. You might as well tell them straight away even if you don’t know exactly how much you will get. If you don’t tell them then the solicitor who is dealing with your Mother’s probate will tell them.

      You can’t normally use inheritance to pay off an IVA. Inheritance is a windfall and so the money you receive will have to be paid into the arrangement in addition to the monthly payments you make.

      The only time an IVA can be settled early with inheritance is if the amount you have received is sufficient to repay 100% of the debt you originally owed (lass the payments already made) + the IVA company’s fees + interest on the original debt at 8% pa from the start of the IVA.

  8. Julie says:

    My husband has recieved money from his father’s estate, of £41 500,. His iva was for £43250 less 2 years already paid. We have offered final settlement of £27500″, which will leave some money for new car, kitchen & windows, our iva company are putting the offer forward however we do understand that this may not be accepted and they will want all the money.

    They have also said they may take the lot plus extra payments. I thought once it’s paid in full that was it not further payemts

    1. Hi Julie

      If the terms of your husband’s IVA are standard then the following would apply if he receives a windfall such as inheritance:

      – 100% of the original debt must be paid (less any payments already made into the IVA) plus
      – 100% of the IVA company’s fees and costs plus
      – interest charged on the original debt at 8% per year from the start of the IVA

      If after all of these have been paid, any funds were remaining, these would be returned to him. From what you have said the windfall received would cover the original debt. However despite the payments already made there would still be outstanding fees and interest and so payments would have to continue.

      Given this I am very surprised your IVA company is willing to even make an offer to the creditors. Most would stick their heals in and say the money simply have to be handed over. That said if they are willing to put a settlement forward they must feel there is half a chance it would be accepted….

  9. Alan says:

    Hi I in my third year of iva I was paying 127 a month I’ve just been made redundant and I retire in October I’ve told them the situation and offered to pay a lump some about 1500 short of what I owe I’m waiting for them to get back to me thinking about it I really need that money to see me throu till I retire or should I made myself bankrupt

    1. Hi Alan

      Given you have offered a lump sum to settle your IVA I assume you received a redundancy payment? If you actually need this to see you through then you could withdraw your settlement offer. Then, if you are not a home owner, bankruptcy could well be a sensible next step to resolve your debts.

      That said depending on how much redundancy money you have received, the funds might be at risk if you go bankrupt straight away. As such you could stop paying your IVA but delay going bankrupt until October. Your creditors are unlikely to start collections actions against you in these timescales.

      If you are thinking about this then I suggest you get in touch with me here at Beat My Debt (0800 077 6180) and we can discuss whether it is a sensible idea and the implications based on your your personal circumstances.

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