A typical IVA lasts 5-6 years, but a great deal can happen in that time. Changes in your life can make it hard to keep up payments. So what can you do if your IVA is failing?

Jump to article contents:

• Why your IVA is failing
• Can you take a payment break
• Can you pay less each month
• Options if your IVA fails

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

Why your IVA is failing?

In general the main reason an IVA fails is that the payments are un-affordable. Its possible they were always un-affordable and your budget was not realistic at the start. Or perhaps there has been a change in your circumstances that has put pressure on either your income or expenses.

You may have had a cut in wages or overtime or have gone on maternity leave. Alternatively your expenses may have gone up. Perhaps an increase in travel costs or a new addition to the family. All these things means you will struggle to meet your IVA payment.

It is possible you have incurred new debts during your IVA which you are now trying to pay. Alternatively you may have forgotten to include one of your creditors or chose to leave them out. This could also be a reason the IVA is failing.

When you start an IVA you should do your best to make sure you include all your unsecured debts. It is also important you do not borrow more during the arrangement.

Can you take a payment break?

A payment break (also known as a payment holiday) is a break from your IVA payments for 2-3 months or longer. This allows time to perhaps find a new job or for other problems to right themselves. The payments you miss are  added to the end of your IVA.

You cannot just decide to take a payment break yourself. You first have to get agreement from your IVA company. Before doing this look carefully at why you are struggling to meet the IVA payments. If there has been a material change to your circumstances then a break may only ‘kick the can down the road’.

Compare the expenses budget you agreed at the start of your IVA with your monthly bank statements and check whether there are any permanent differences. If so you may need to ask for a permanent change to your payments.

The heart of a successful IVA is an affordable, realistic budget. If you are committed to it and being open with your IP / creditors, you have the best chance of success.

Can you pay less each month?

In certain circumstances where your IVA is failing it is possible for your IVA Company to reduce your monthly payments. They will normally do this if there is no way you could have avoided the change to your circumstances. The alternative for them is to let the arrangement fail.

If you need your payments to reduce by more than 10% your IP  will have to propose a variation to your creditors. Generally they will accept if the proposal is reasonable. However they may ask you to increase the number of payments you make into the IVA to compensate.

If you already paying quite a low monthly amount (£80 or less) you may find it is not possible to reduce this further as your IVA would then not be viable. The total money paid into an IVA has to cover the fees involved and provide at least some return to your creditors.

If you have been made redundant you may have received a redundancy payment. It may well be possible to use some or all of this to settle your IVA early. You should discuss this possibility with your IVA Company.

Options if your IVA fails

If you can no longer make any payments it may not be possible to save your IVA and you will have to let it fail.

Where this happens you will normally still owe most if not all of the debt you had when you started the agreement. You will therefore need to plan how you will manage this moving forward.

There are a number of options you can consider including starting a brand new IVA, using a Debt Management Plan or considering going bankrupt. The solution that you choose will depend on your circumstances.

If your IVA has failed or is failing speak to us about your options. We can give confidential independent advice on the best thing to do (call 0800 077 6180 or complete the form below).