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.
Included in this article:
- What is a Windfall?
- Can the money be used to pay an IVA early?
- Is it ever possible to keep any of the cash?
- Can you keep a Windfall after your IVA is completed?
Rather speak to a person? Call 0800 077 6180 or fill in the form below and we’ll call you
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.
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.
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.
Need more advice about an IVA? Call us (0800 077 6180) or complete the form below. It’s free and confidential.
Arrange a call with an IVA Expert
Privacy Policy
Your information will be held in strictest confidence and used to contact you by our internal team only. We will never share your details with any third party without your permission.
Hi James,
My father had an IVA and finished payments circa 4 years ago. He received a windfall of around 7k for mis sold PPI. He was contacted last week by the IVA company who advised he would need to pay back 4k of this windfall. 4 years seems a long time after completion to be chasing this. Can you advise if this seems appropriate?
Thanks,
Mark
Hi Mark
In March 17 the Court of Appeal ruled on a case called Green v Wright. The ruling in that particular case stated that PPI compensation claimed after an IVA is completed still has to be paid to the IVA company. There is no time limit on this. As such if the claim is made 4 years after the completion certificate is issued it still stands.
Many IVA companies have said that the ruling does not apply to them due to different IVA terms and conditions. However others have said it does. I assume your Father’s IVA company are one of these. As such money claimed is now likely to go to them I am afraid. There is nothing that can be done about it.
My husband is just about to receive a compensation payment for an injury and we have an IVA…how do we stand with this.
Hi Shaz
Generally speaking if your husband receives a windfall during his IVA it will be have to be paid into the Arrangement in addition to his ongoing monthly payment. On the face of it compensation for personal injury is a windfall so the rule applies.
That said normally there are two different types of personal injury compensation. Money awarded for pain and suffering and money awarded for loss of earnings. Generally the IVA company will allow him to keep the award for pain and suffering but any for loss of earnings would have to be paid to them.
You will need to ensure the solicitor or claims company you are using gives you a clear written break down stating how much of any award is for each area. The IVA company will need this to decide what (if anything) they need to take and what he can keep.
I have an IVA since May 2019. I contacted them to say that I have a pension which I am surrendering to pay off what I owe as I worry constantly about this IVA as I am now 55.
The Pension has been frozen for years and I will definitely get more out of the pension that I owe.
I know that my total owing plus interest and fees will be due as they told me this. Will they just take total owing plus interest and fees? I did not know I had to contact them as I just thought as long as IVA paid in full along with fees I will be ok
Hi Bridget
Something does not sound right here. Normally you should be able to settle an IVA early with a lump sum from your pension without having to pay interest and fees….. The reason for this is you cannot be forced to take your pension. As such most IVA companies would agree to settling if you release sufficient to pay off the remaining total of your payments. Paying more than this when you do not have to does not seem sensible. I think your IVA company is trying to pull a fast one….
I understand that you simply want your IVA behind you. However I would urge you to consider the extra amount you will be paying by going along with the IVA company’s request rather than simply continuing with your monthly payments. Remember you have the option of accessing your pension at any time so if your payments really become unmanageable you can always fall back on it at that time if you need to.