Generally speaking the standard length of an Individual Voluntary Arrangement (IVA) is five years after which any unpaid debt will be written off.

One of the advantages of this type of solution is that once it is agreed with your creditors you know exactly where you stand in terms of the number of months the arrangement will last and therefore how much you will have to repay.

However it is important to be aware that under certain circumstances the length of time that the Arrangement will last may be extended after it has been put in place. We will look at these circumstances in more detail.

Will my IVA be extended if the monthly payments reduce?

If your living expenses increase or your income falls while you are in your IVA and you are no longer able to afford your agreed monthly payments, it may be possible for you to apply to reduce the amount you pay them each month. This known as applying for a variation of the Arrangement.

Depending on the circumstances your creditors may approve the variation and agree to reduce your monthly payments without making any other demands.

However in return for accepting reduced payments they are quite within their rights to ask that the number of payments you are required to make be extended. As such you still pay the same total amount into the Arrangement but to achieve this you pay for longer so your creditors ultimately still receive the same return.

Do you want help to start an IVA? Give us a call on 0800 077 6180 or complete the form below to speak to one of our experts

Will my IVA be extended if equity cannot be released from my property

If you are a home owner it is likely that you will be required to release equity from your property in the last year of your IVA by re-mortgaging.

However in the current economic climate, even if you have equity in your property it is normally extremely difficult to find a mortgage lender who is prepared to give you a mortgage offer. If you have equity that cannot be released because you cannot re-mortgage your creditors will normally accept a 12 month extension to your monthly payments instead.

This means that you will be required to pay for an extra twelve months but then your Arrangement will be completed without the need to release equity from your property.

Will the length of my IVA be reduced if I pay more?

On the basis that if your monthly payments reduce you may have to pay for a longer period to compensate you may feel that it would then be fair for the number of payments you make to be reduced if you can start to pay more into your arrangement. Unfortunately, this is not the case.

When you start the Arrangement you agree that if you can subsequently afford to increase your monthly payments you will do so but the number of payments that you make will remain the same. As such the net result is simply that your creditors will receive more of the money that they are owed.

The length of your agreement will only reduce if the amount you can afford to pay each month increases so much that you manage to pay back 100% of your debt before the end of the standard arrangement period OR you are able to offer a cash lump sum to settle the Arrangement early.