Money Advice, Debt Advice & Debt Help
Can I stop paying my IVA and declare myself Bankrupt?

Can I stop paying my IVA and declare myself Bankrupt?

Can I stop paying my IVA and declare myself Bankrupt?

There are various reasons why you might want to, or need to terminate your IVA. The IVA is a legally binding arrangement but can you break it, stop paying the IVA and go bankrupt instead?

Jump to article contents:

Considering ending your IVA? Give us a call 0800 077 6180 or complete the form below to speak to one of our experts.

Are you allowed to stop your IVA

Simply, yes you can stop your IVA. There are various genuine reasons why you might want to do this. Most commonly the payments become unaffordable or you simply believe that you have chosen the wrong solution.

The way to cancel the Arrangement is to stop making your payments. You should also contact your IVA company and tell them you want them to terminate it. They may try to persuade you to stick with the Arrangement. However if your mind is made up they cannot stop you.

You will receive a formal letter from your IVA company confirming the termination. This will normally happen between 3-6 months from when you made your last payment.

Your creditors are unlikely to contact you for at least 3 months from the point you stop paying your IVA. They will not be aware anything has changed until your IVA company tell them it has terminated (the same time as you receive this confirmation).

When is bankruptcy a better option than an IVA?

There are a number of circumstances where paying an IVA for 5-6 years does not make sense.

An IVA is designed to protect your home. If you are a tenant paying rent you have no property to protect. If you go bankrupt your landlord’s property is not affected. It is very unlikely that they will be told and you will be able to continue living their without issue.

To complete an IVA you will normally have to sustain monthly payments towards your debts for 5-6 years. In bankruptcy you will not have to make any further payments if you have no surplus income. If you do have a surplus payments will last just three years.

If your car is worth less than £1000 you will be able to keep it if you go bankrupt. In addition you can keep all of your household possessions unless they are excessively valuable.

If you own a home you need to be careful about bankruptcy. If you have little or no equity it might still be an option. Call us (0800 077 6180) or complete the form below to discuss this with one of our specialists.

Will you lose the payments already made?

If you stop paying your IVA you will not be able to get any of the money you have paid back. It is also important to understand that not all of this will have gone towards repaying your debt.

Your insolvency practitioner has the right to charge fees for implementing and managing the Arrangement.

If you have only been paying for a short period or your payments are relatively low then a high percentage (if not all) of what you have paid will be taken by the IP to cover their costs.

Once you have stopped your IVA you are therefore likely to find that your total outstanding debt is the same as when you started the Arrangement.

Once you stop your IVA it is very unlikely that your creditors will make you bankrupt because it is not in their interest. Normally you will have to make the application yourself.

Arrange a call with a Bankruptcy Expert

    Need help with the bankruptcy process?

    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.

    4 thoughts on “Can I stop paying my IVA and declare myself Bankrupt?

    1. Ryan says:


      I am struggling with money due to low income and struggling to get by i am paying an IVA but im still being left short every month can i declare myself bankrupt

      1. James Falla says:

        Hi Ryan

        Yes if you feel your IVA is not right for you, you can stop it and go bankrupt. If you are struggling to pay and you are not a home owner bankruptcy might actually be a much better solution for you.

        If in reality you have no surplus income then once bankrupt you will not have to make any further payments towards your debts. The process would last just 12 months after which time you would be free of your debt.

    2. Adelle S says:

      Hello, I have a mortgage and 2 children in school while im a single parent working, presently on sick due to a broken finger. I have an iva which i believe ive had for 2 years now. I have fallen behind with payments before then caught up again by loaning money off family and friends. I cannot keep making the payments its crippling me. Can i go bankrupt instead please? With this effect any car insurances or home insurances i hold? With thanks

      1. James Falla says:

        Hi Adelle

        Cancelling your IVA and going bankrupt is only an option for people who are not homeowners. I note you say that you have a mortgage. Given this I assume you are a home owner? If so and there is equity in your property, your home would be at risk if you go bankrupt.

        If you do have equity in your property, the best advice is probably to continue with your IVA if you possibly can. If you have little or no equity, or are planning to sell your property regardless, then bankruptcy might still be sensible. But you should not make any decisions without speaking to me first. If you would like to have a chat, call me on 0800 077 6180

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    Learn how your comment data is processed.