You can usually keep any cash lump sum payments you receive after your IVA is completed. However, there are some limited circumstances where this is not the case.
Included in this article:
- Can I take a pension lump sum after my IVA?
- What happens to proceeds from the sale of property?
- Redundancy payments after an IVA
- Compensation payments and inheritance
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Can I take a pension lump sum after my IVA?
After your IVA is completed, you are free to take a lump sum from your pension. You can keep all of this money. This is the case even if you were paying into your pension while you were still in the Arrangement.
The fact that the pension policy existed any you may have paid into it during the Arrangement is irrelevant. Pension funds are not taken into account as part of your assets for the purposes of an IVA.
The only exception to this rule is if you release a cash lump sum from your pension before the agreement is formally completed. If you do this, the money can be claimed by your IVA company as a windfall. They then have the right to demand that the funds are paid to them.
For this reason, the only time you should consider taking cash from your pension during the Arrangement is if you have made a prior agreement that the money will be used to settle the agreement in full.
An IVA is only completed after you have received written confirmation from your IVA company (a completion certificate). It is not completed on the day you make your last monthly payment.
What happens to a cash lump sum from the sale of property?
Once your IVA is completed, you are free to sell any property that you own. Any cash lump sum you receive after the mortgage any any other costs are paid, will be yours to keep.
The property may have formed part of your IVA agreement, but because this is now completed and finished, all rights to the property are returned to you.
Do not sell any property during your IVA without getting advice first. If you do so without any prior agreement, your share of any proceeds raised from the sale will have to be handed to your IVA company. This might cost you thousands compared to waiting until after the Arrangement is completed before you sell.
If you have to move during your IVA, you might be able to avoid selling your property by renting it out. You move into to rented accommodation yourself until the Arrangement is completed.
Redundancy payments after an IVA
If you lose your job and receive a redundancy payment after the completion of your IVA, this cash lump sum is yours to keep. As the Arrangement no longer exists, such a payment can no longer be taken away from you.
It is very different if you get redundancy money before your Arrangement is completed. If that were to happen, you would be allowed to keep the equivalent of up to 6 months take home pay. You would be expected to maintain your living expenses and ongoing IVA payment with this money.
Anything left over would have to be handed to your IVA company.
Compensation payments and inheritance after an IVA
Cash lump sums you get as the result of a compensation or inheritance payment can be more complicated. You can only keep these payments if the reason for them happened after the date your IVA was completed.
So for example, if you have a car accident after the date your IVA is completed, you can keep any compensation you received.
However if the accident happened during the Arrangement, the compensation will have to be paid to your IVA company. This is the case even if the actual pay out happens after the date of completion.
It is the same with inheritance. You can only be 100% certain of being able to keep all your inheritance if the person who leaves you the money dies after your IVA is already completed.
If someone dies while you are in your IVA, the money you receive is still an asset of the agreement. It will have to be paid to the company managing the Arrangement. This is still the case even if probate and the payment is not sorted out until after your completion date.
If you inherit money during your IVA call us for advice (0800 011 4712). It is important to understand the implications.