Can an IVA last for more than 5 years

An IVA will normally last for 5 years with 60 monthly payments. However it is possible for the agreement to be extended in certain circumstances.

Included in this article:

Creditors can demand a six year IVA
Taking payment break will mean your IVA lasts longer
What if your monthly payment is reduced
IVA extended if home equity cannot be released

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Creditors may demand a six year IVA

Traditionally a monthly payment IVA will last for 5 years. Most IVA companies will put forward a proposal based on the standard of 60 monthly payments.

However, creditors do not have to accept this. It is becoming increasingly common for them to demand the length to be extended to 6 years (72 months).

You should expect a 6 year IVA if the monthly payments you propose are relatively low. So it is common to see 6 year IVAs where the payments are £100/mth or less.

You will read and may be told that your IVA will last 5 years. However you need to be prepared to accept 6 if your creditors demand this.

Taking a payment break will mean your IVA lasts longer

It is possible to take a pre-agreed break from your payments during your IVA. This can be really useful if your income falls temporarily because for example, you go on maternity leave or lose your job.

Most standard (Protocol compliant) IVAs allow up to 9 months of payments breaks. However if and when these are taken, they must be made up.

Generally speaking, payments missed due to agreed payment breaks are added to the end of the agreement. The result is that the IVA is extended for the equivalent number of months that were missed.

Monthly payments added to the end of an IVA are based on the last standard payment amount even if this is higher than the missed payments would have been.

How long will your IVA last if your monthly payment is reduced?

Your circumstances may change during your IVA. Your income may fall or your expenses increase for some reason. As a result you may need to reduce your agreement payment.

To make this kind of change, your IVA company normally has to get formal agreement from your creditors. This is known as getting a variation.

If the reasons for the reduction are justified, the creditors will often agree. However, they will expect to be compensated for this. As standard you will be required to add an extra 12 – 24 months of payments to the end of the agreement.

If you get agreement to payments are reduced, you must expect that your IVA will then last for an extra 1-2 years.

IVA will be extended if home equity can’t be released

If you are a home owner, you will have to agree to a so called equity release clause. As such, in the 5th year of your IVA you must attempt to release equity from your property and pay this into the Arrangement.

Where it is impossible to release equity from your property (perhaps because you can’t re-mortgage), your IVA will be extended for an extra 12 months instead.

As a result, the agreement will last for an extra year. However most people actually prefer this option over having to re-mortgage their property and give up equity.

We can help you understand how long your IVA will last. Give us a call (0800 011 4712) or complete the form below.

4 thoughts on “Can an IVA last for more than 5 years”

David says:

19/03/2021 at 15:48

Hi, I was in an iva, I have received an email today saying that an equity enquiry has been completed and my iva has been extended for 12 months because of the equity in my house even though I am unable to get the equity out.

Is this normal and can it be extended further?

James Falla says:

19/03/2021 at 15:52

Hi David

This is absolutely normal. If you are a home owner it would be standard to have a clause in your IVA terms and conditions saying that you need to release equity from your property in year 5. If there is equity above £5000 but release is not possible for whatever reason, then the IVA is extended for 12 months instead. It would not normally be extended past this unless you miss payments during the extra period which then need to be made up.

Nicola H says:

26/10/2021 at 10:33

I’m currently in an IVA and initially the creditors would only accept if it was extended by 2 years as could only afford £185, which initially was fine. I then was made redundant and sent in a lump sum of £7590. But then as I wasn’t working could only afford £76 a month and they added another 2 years which has took me up to 10 years! Can they do this?

26/10/2021 at 10:55

Hi Nicola.

If your income falls and your IVA payments reduce as a result, it would be standard for your IVA company to extend the length of your agreement to compensate your creditors. This seems to be what has happened in your case. You were made redundant so your payments reduced from £185/mth to £76/mth. Your IVA has been extended for 2 years as a result.

That said, I feel that your IVA company has been harsh.

The fact you paid an extra £7590 into the plan from your redundancy seems to more than compensate for the loss your creditors suffered as a result of the reduction in your ongoing payments. I think they could have taken a more reasonable approach and not extended in these circumstances. However, your IVA company seems to have chosen to follow the letter of the agreement rather than help you out.

A 10 year IVA does not seem sensible to me. Unfortunately, you only have 2 options. You can either accept what your IVA company has said and carry on. Or you can cancel your IVA and do something else. If you are not a home owner, you might want to consider simply going bankrupt to write off the debt.

If you would like to speak to me about your options, please don’t hesitate to give me a call. The advice is free and without obligation (0800 011 4712).