What happens to a Windfall during an IVA?

Windfall during an IVAA windfall received during an IVA normally has to be paid into the Arrangement. However it is unlikely to result in the agreement being paid off earlier.

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What is a Windfall?

A windfall is any sum of money you receive during your IVA over and above your expected income. If you get any money like this 100% of it will normally have to be paid into the Arrangement.

Common examples of windfalls are an inheritance payment, lottery win or compensation for mis selling or personal injury. Equity released from the sale of a property would also fit into this category.

If a third party offers to lend you money to settle your IVA this is not a windfall. This is because the money would not otherwise be yours. It is only available if your creditors agree to take it in settlement of the Arrangement.

If you earn overtime or get a bonus from your employer this is generally not classed as a windfall. In these circumstances you will normally be able to keep 50% of the extra money you have received.

Can a Windfall be used to pay off an IVA early?

Although any windfall you receive has to be paid into your IVA this does not mean the Arrangement will be paid off sooner. The result is simply that a higher portion of the debt you originally owed is repaid.

After the cash you have received is handed over your ongoing payments continue as normal. The outstanding amount you are required to pay is not reduced.

Having said that there are circumstances where a windfall could result in an IVA being paid off early. One of these is if the amount received is so large that the total outstanding debt is paid in full together with fees and interest.

Although a redundancy payment is classed as a windfall it may be possible to use this cash to settle an IVA early. This will depend on how likely you are to be able to get a new job.

Is it possible to keep a Windfall received during an IVA?

If the windfall you have received is less than £500 you may be able to keep this money. Given your IVA is based on the standard Protocol terms and conditions receipts of less than £500 do not have to be handed over.

Where the windfall is over £500 generally speaking you have to pay the whole amount into the Arrangement. However depending on the attitude of your Insolvency Practitioner (IP) you might be able to keep the first £500.

In addition if you have a financial emergency meaning that your health or the IVA itself is at risk you might be allowed to keep more. For example if you need to carry out vital repairs to the car you need to get to work.

You must not spend any part of a windfall you have received without your IP’s prior agreement. If they ask you to hand it over after it has already been spent your whole Arrangement could be put at risk.

When do the IVA Windfall rules end?

The IVA Windfall rules remain in place until your IVA until it is formally completed. They are only lifted once you have received your Completion Certificate. This will normally be 6-8 weeks after you have made your final payment.

If you receive cash after you have made your last payment but before you receive your Certificate it is still a windfall. As such it must still be paid into the Arrangement.

These rules are particularly relevant in regards to PPI. If you receive this type of compensation after your monthly payments have finished but before you have your Certificate it is a windfall and must be treated as such.

After you have your Completion Certificate any windfalls you receive from then on should be yours to keep. Even if the sum is large your creditors are no longer entitled to it.

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14 thoughts on “What happens to a Windfall during an IVA?

  1. Joanna says:


    I am in an IVA at the moment and have just been told that I will still owe about £10000 after I pay 14000 in from inheritance I have got. The original debts were only £14900 so how can this be right???

    1. Hi Joanna

      As highlighted in the article above an inheritance payment you receive during your IVA is treated as a windfall. This means that the money must be handed over to your IVA company. It is paid into your Arrangement over and above the ongoing payments which you are still required to make.

      In your case the reason you still owe money is that your IVA agreement almost certainly states that where extra funds become available you agree to pay up to 100% of the original debt you owed plus the fees incurred by your IVA company to date plus interest charged at 8% a year on the original amount of your debt calculated from the start date of your IVA.

      The interest on a debt of £14900 over 5 years could therefore be around £5k and when you add fees and costs on top you can see why you still owe £10,000. Unfortunately in your case the only people to have benefited from your inheritance are your creditors I am afraid.

  2. Mike says:

    I’ve been in an IVA for 3 1/2 years with 1 1/2 years left to to pay. I am 49 and have received a refund of pension money back from the FSCS because I was mis sold a SIPP pension. This money is my pension pot which I need to re invest for my retirement.

    However the cheque has been sent to the company that is doing my IVA. Can they keep the money? The cheque should of got to them no later then 10 days after the 21st June but when I ring they just say it might be with their banking team but they don’t really know and to ring back in 3 to 4 days…..

    1. Hi Mike

      In this situation I would think that the pension refund you have received should not be treated in the same way as a windfall. A pension fund is an exempt asset and as such your creditors cannot expect it to be used to pay your debts.

      I think the refund will be classed as a simple transfer of your pension fund from one fund manager to another. As such your IVA company should simply release it to be invested in another fund (although they may not release it to you but to a new pension provider you choose).

      The only time cash from your pension fund should be at risk from your IVA is if you have reached the age of 55 and choose to release it without prior agreement from your IVA company. The funds released would then be a windfall and have to be paid into the Arrangement.

      Note: I must stress that we are not solicitors here and I cannot give you any legal advice. The above is simply my personal opinion.

  3. Jill says:


    If you are in an IVA and you get a bonus from work once a year are you allowed to keep it or do you have to declare it? As far as I am aware this is not classed as a windfall?

    1. Hi Jill

      If you get a bonus during an IVA it is treated in the same way as overtime. You must declare it to your IVA company in the month you receive it. You will be able to keep the equivalent of 10% of your normal monthly take home pay. 50% of anything extra must be paid into your Arrangement.

      You must declare that you have received a bonus as soon as you have got it. If you don’t it is likely to be discovered by your IVA company when you have your annual review (you usually have to produce your wage slips and bank statements for the last year). Your IVA would then be classed as being in arrears and you will need to make these up either by increasing your monthly payment or adding additional payments to the end.

  4. Jill says:

    Hi. My husband has an IVA and I am due to receive an insurance payout for a car accident I was involved in over 2 years ago. I have read on other websites that the IVA can’t touch the part of the insurance compensation for pain and suffering only for loss of earnings. Is this right?

    1. Hello Jill,

      If you are not in the IVA and you get a windfall such as an insurance payout or any other form of compensation then this is yours to keep. It is only windfalls that your Husband receives in his name that would have to be paid into the Arrangement. Anything that you receive in your name is not at risk.

      On the other hand if it was your husband who was in the accident and the payment was due to him then yes he could keep anything paid as a result of pain and suffering. However he would have to have to hand over the element received due to loss of earnings.

  5. Kie says:

    If I enter into and IVA then 3 years down the line I inherited a sum of money that could pay off the total I owed before entering the IVA, is the amount I’ve paid off for the first 3 years of the IVA deducted from the total??

    1. Hi Kei

      The answer is yes. The total you would have to repay is the total of the original debt included in your IVA less the payments you have already made.

      However remember the IVA company are also allowed to add their fees and also interest charged at 8% pa from the start date of the IVA. Given this it is likely that you will repay more than you originally owed.

      Any funds remaining from your inheritance you can of course keep these.

  6. zoe says:

    hi ive been in a iva for just over a year. Someone broke into my home over new year and stole items which were left to my children when their dads mum dies last year. Im expecting to get some of the money back from this and put it away for when they are older as the money should be theirs. Can my iva touch this

    1. Hi Zoe

      If you have a break in and make an insurance claim against stolen goods any money you receive is not generally considered a windfall. You would normally be allowed to keep the funds and would not have to be pay them into your IVA. The reasoning for this is that you are simply replacing the items you lost which were never part of the IVA agreement.

      The items you are talking about were actually never yours. In effect you were simply storing them in your home. As such money received from the insurance company for these is not yours and could never be taken by your IVA.

  7. Kyle Thompson says:

    I am due to receive some compensation money from a recent car accident for whiplash and back pain, do I have to hand it to the IVA or will the check come to me

    1. Hi Kyle

      This is a very common question. The answer is that if you are awarded compensation for “pain and suffering” it should be yours to keep. Only compensation for “loss of earnings” has to be paid into your IVA.

      Normally you will need to contact the claims company / solicitor you are using and ask them to confirm in writing the amount you have received for pain and suffering. You can then give this to your IVA company and they should let you keep the associated money.

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