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Managing an IVA

Can an individual voluntary arrangement (IVA) fail?

An IVA is a legally binding agreement between you and your creditors that helps you pay off your debts at an affordable rate. This means that creditors have to abide by the rules. It also means that you need to stick to what you’ve agreed to do as part of your IVA proposal. If you don’t, this can lead to your IVA failing.

There are certain things that could put your IVA in jeopardy, and many people worry about what they would do in this situation and where they stand. However, it’s important to remember that many IVAs are successful.

IVAs are arranged by StepChange Voluntary Arrangements, part of StepChange Debt Charity.

How to find out if an IVA is right for you?

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What is an IVA breach?

Your IVA won’t fail instantly if you do break the terms of your proposal. You’ll be issued with a breach notice, which lets you know how you’ve broken the terms and what you can do to put it right. A breach notice can be issued for not doing what was agreed in your IVA proposal. This includes:

  • Missing payments or falling into the equivalent of three months' arrears with your contributions
  • Not doing something the Supervisor of your IVA reasonably asks you to do - for example, not selling an asset you agreed to sell
  • Not paying in a percentage of additional income that you've earned
  • Failing to pay any money you make from selling assets into your IVA
  • Borrowing more than £500 without the Supervisor's permission. This includes borrowing money from family or friends
  • Not providing information needed for your annual review
  • Not declaring windfalls to the Supervisor (such as inheritances, compensation pay-outs, or lottery wins)

What happens if I breach my IVA?

Your breach notice should tell you what the problem is and give you a timescale to remedy things. If you don’t remedy the breach, the Supervisor will have to arrange a meeting of creditors. During this meeting, your creditors will be given the option to terminate your IVA.

There are usually things you can do to get your IVA back on track, for example by providing the information needed for your annual review, or by paying in additional income. If your circumstances change and you aren’t able to do this, your Supervisor could ask your creditors to vary the terms of your IVA, and accept a change to what they originally agreed when your IVA was approved.

Breaking the terms of your IVA can happen when your circumstances change for the worse. It cam also happen f your income increases and you don’t declare it, and you find yourself in breach of your IVA.

Any changes, good or bad, must be disclosed to the Supervisor of your IVA.

If you’re not sure whether something could go against the terms of your IVA proposal, it’s important you get in touch with your Supervisor for advice.

Can I terminate my IVA voluntarily?

Yes. You can ask that the Supervisor terminates your IVA by putting your request in writing. Please be aware that if you do this, your creditors could add backdated interest and charges to your outstanding balances. The date your IVA was processed will remain on your credit file for six years, and it can take several months for your name to be taken off the IVA register.

Clare Lindley and James O'Carroll of StepChange Voluntary Arrangements are licensed to act as insolvency practitioners in the UK by the Insolvency Practitioners Association.

How can I keep my IVA on track?

If you’ve had changes to your circumstances, there are things your Supervisor can do to keep things on track. For instance, if you have short term emergency costs, you could be able to take an authorised payment break to help you cover it.

If you’ve had a more long-term change, it might mean that your Supervisor needs to contact your creditors to arrange a variation of your IVA.

Your IVA Supervisor will act fairly in dealing with any changes to your circumstances, and will be able to decide on any action that needs to be taken. The sooner you make them aware of any issues, the sooner they’ll do what they can to help.

What if I can’t prevent an IVA breach?

If all other options have been explored and your IVA fails, your Supervisor will send you a certificate of termination to confirm that your IVA has come to an end.

Should your IVA be terminated, you’ll no longer be protected from your creditors taking action against you. The payments you’ve made into your IVA will be taken into account, but you’ll still be liable for the remaining outstanding amount. They can start or resume interest charges on your debts. There's also a chance that your creditors could petition to make you bankrupt.

Bear in mind that the amount you pay off towards your debts may be less than the amount you pay into your IVA, because of nominee and supervisor fees. Find out more about IVA costs and fees.

Should your IVA be at risk of failing, speak to a debt advisor as soon as possible to discuss the options open to you. They’ll work with you to try and make a success of your IVA, but if your circumstances have changed to the extent there’s no realistic chance your IVA can be successfully completed, termination may be the only option.

Get help now

  1. The first step is to see whether an IVA is right for you. To do this use our free online advice tool
  2. If an IVA is the best solution to your debt problem our specialist company, StepChange Voluntary Arrangements, can help you through the set up process
  3. We'll review your finances and put forward the IVA proposal to your creditors

If you already have an IVA, you should always discuss your situation with your insolvency practitioner first.

IVAs aren't available if you live in Scotland. In Scotland, a protected trust deed is a similar solution, with different benefits, risks and fees associated with it.

StepChange Voluntary Arrangements is a registered trading name of Consumer Credit Counselling Service Voluntary Arrangements Limited, a wholly owned subsidiary of StepChange Debt Charity.