You can legally cancel your IVA part way through if you want. You are then free to pay your remaining debts yourself. Or, you can use a different debt solution to manage them.
Included in this article:
- Is it legally possible to cancel and IVA?
- How much debt will you still have to pay?
- How to pay off the remaining debt yourself
- Would you be better going bankrupt?
Want to cancel your IVA? Call us for advice (0800 077 6180) or complete the form below. It’s free and confidential.
Is it legally possible to cancel an IVA?
You are legally allowed to cancel your IVA at any time during the Arrangement. This means you can stop it and pay your debts yourself if you want.
The way you cancel is first, stop making your payments. You don’t need permission to do this. You just stop further payments coming out of your bank. If they are taken from a debit card, you might have to cancel the card and get a new one.
Once you have stopped your payments, your IVA company is likely to chase you. At that point simply tell them you want to cancel. They might try to change your mind, but they have no legal power to force you to continue with the agreement if you don’t want to.
Your IVA company can’t charge you any more money.
It will normally take between 3-6 months for your IVA to be officially terminated. You will received a confirmation letter from your IVA company once this has happened. 3 months later your name will come off the insolvency register.
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.
How much debt will you still have to pay?
After your IVA is cancelled, you still have to pay all the debt you still owe to each of your creditors.
This is not just the remaining amount you agreed to pay into your IVA. If you cancel, your creditors will demand you pay the total amounts you originally owed them at the beginning.
You might expect that the original balances you owed would be lower now because of the money you paid into your IVA. However, they may not have gone down as much as you think.
This is because not all of the money you paid will have been used to pay off your debts. Some will have been held back by your IVA company to cover their fees and costs. This is perfectly legal.
As a rule of thumb, if when you stop paying and you have been in the Arrangement for less than 18 months, the amount of debt you still owe will be the same as when you started. If you have been in longer the balances may have reduced. But not necessarily by very much.
After you stop your IVA, your original debts may not have gone down by much because some of the money you paid in will have been used to pay costs and fees.
How to pay off the remaining debt yourself after you cancel your IVA
Once your IVA is cancelled, you are allowed to pay the outstanding debt off yourself.
Remember, you will not be able to do this until the agreement is officially terminated. You will know when this has happened because you will receive a letter from your IVA company confirming the termination and that they are no longer supervising the Arrangement.
You will also get report showing how much (if anything) has been paid to each of your creditors.
There is no point trying to speak to your creditors before you have confirmation of the termination. This is because they can’t agree a payment plan directly with you until then.
After you have received your termination letter, you are free to negotiate directly with everyone you still own money to. You can set up a monthly payment plan with them if you like.
Alternatively, you can offer to settle your debt for less than the total balance owed with cash lump sums if you have money available.
Want assistance negotiating a payment plan or settlements with your creditors after cancelling your IVA? Call us (0800 077 6180) or complete the form below.
Would you be better off going bankrupt?
You might want to cancel your IVA, but paying off your remaining debts with a monthly payment is still going to take a long time (more than 3 years). In these circumstances, you should consider just going bankrupt.
This is likely to be a sensible option if you are not a home owner and the amount you can afford to pay towards your debts each month is relatively small.
Once you are bankrupt, you will only have to make ongoing monthly payments for a maximum of 3 years.
If your only income is benefits or you have a very low surplus, you will not have to make any further payments at all. You would therefore be debt free in just 12 months.
Another advantage of going bankrupt for someone in your situation is that you can do it as soon as you like. You don’t have to wait for your IVA to be officially terminated.
Want more advice about cancelling your IVA and what to do next? Call us (0800 077 6180) or complete the form below. Its free and confidential.
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I’m nearly 62 and decided to do an IVA due to having debts of about 25,000. I’ve been paying this for a year now but my father recently passed away and I am expecting some inheritance probably around 10,000.
I really don’t want all of Dad’s money going to my IVA company and I’m sure I could get settlement figures from my creditors which would reduce the amount I owe. There is also the fact that I’m getting a works bonus at end of June which I really need for sons wedding.
I can’t retire until I’m 67 so have 5 years left to pay. Should I stop the IVA?
Hi Cheryl
It is difficult to advise you without knowing more about your circumstances. That said, if you are in line to receive some lump sums (inheritance and bonus) then it is certainly worth considering cancelling your IVA and paying off / settling your debts yourself if you feel you would be better off doing this.
If you don’t cancel, then the money you are expecting to receive will have to be paid into your IVA as a windfall. In other word’s you would not be able to spend the bonus money on your son’s wedding.
Given the amount you are likely to get, handing the money over to your IVA company would not reduce the time it would take you to complete your IVA and you would have to continue making the monthly payments.
Hello, I signed into an Iva in august 2021, I now only owe £4300 as that is the settlement figure they have given me however I just want to be free from it all now I need to take on extra hours at work due to the cost of living being so high and I’m worried that they will make me increase my payments and it will be pointless increasing my hours.
Is there any way I can get out of this Iva now? I’m considering contacting all my creditors and asking them what they would want from me each month so I can’t leave the Iva what do you think? Thank you
Hi Stephanie,
If you are no longer happy with your IVA, it is possible to cancel. However, it is important to be aware of the implications.
One of the main ones is if you cancel, you will be liable for all of your original debt (what you owed before your iva started). Some (if not all) of the money you have paid in will go towards paying the IVA company fees.
Unfortunately, I don’t think your creditors will talk to you while you are in your IVA. But I am sure that they will agree a payment plan with you after you cancel if that is what you decide to do.
If you want to have a chat to me about it and your options, please do give me a ring (0800 077 6180). The advice is free and confidential.
Hi I have been in my IVA for a year, I have just got a new job which means my pay has increased quite considerably. I wish to cancel the IVA and pay the creditors back. The company who I have the IVA with have told me payments will go up but not how much much by its all very distressing and id rather just try to pay back what I owe
Hi Sam
There is nothing to stop you cancelling your IVA if you wish. You can do this any time by cancelling the payment to your IVA company. There is nothing they can do to stop you once your mind is made up.
You can read more about how to cancel your IVA by clicking on this link: How to cancel your IVA
Once you have formal confirmation from your IVA company that the Arrangement is terminated, you are then free to approach your creditors yourself and make a repayment plan directly with them.