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What happens to a Windfall during an IVA?
Money Advice, Debt Advice & Debt Help

What happens to a Windfall during an IVA?

What happens to a Windfall during an IVA?

A windfall received during an IVA normally has to be paid into the Arrangement. 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 ever possible to keep cash 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.

Can you keep windfalls received after your IVA is Completed?

The IVA Windfall rules remain in place until your IVA 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.

You might get a cash lump sum after you have made your last payment but before you receive your Certificate. If this happens it still has to be paid into the Arrangement.

After you have your Completion Certificate almost all cash sums you get from then on will be yours to keep. You will not have to hand them over to your IVA company.

There are a few windfalls that still have to be paid into your IVA after you have a completion certificate. Examples include compensation paid for wrongdoing which happened before or during your IVA.

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

  1. Emma says:


    I claimed PPI on an EGG Loan before the deadline. It had taken until January for them to make a decision because of the volume they had to get through.

    I entered an IVA in November does the funds have to go to them as if the PPI timescales had be adhered to I would of received those funds before I entered the IVA

    1. Hi Emma

      Sorry but any money you receive as a result of this PPI claim is a windfall and will have to be paid into your IVA. It does not matter that the claim was started before you entered into the Arrangement. If the money is paid over while your IVA is in place it is a windfall.

      It is possible that the bank paying the money will actually check to see if you are in an IVA before they hand over the finds. If they find out they are likely to make the payment direct to your IVA company.

      You would only have been able to keep the money if it had been paid prior to your IVA starting. However then any funds you had in your account would have been taken into consideration in the IVA proposal.

  2. Greg says:


    I’ve about 15 months left of my iva. Currently paying about £472 per month. I have recently just heard that an agreement has been reached regarding a pay rise between the union and the govt. It could be somewhere around £3000 after tax. This is back pay owed from sept 2017 and Sept 2018 respectively. Will all of this need to go into the iva?

    1. Hi Greg

      I believe your IVA company will treat this as a simple windfall. As such 100% of the money you receive will have to be paid into the your IVA.

      That said the money is in lieu of a pay rise. As such, had you just received the monthly pay increase as normal, you would have only had to pay 50% of any extra monthly surplus income generated as a result. As such you might be able to argue that your IVA company should let you keep half of the amount. I am not sure whether they will see it like that but it is certainly worth a try.

      It is also important to understand that if your ongoing monthly income increases, then you will need to carry out a review of your income and expenses budget. Your ongoing payments may also increase if your expenses have not changed.

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