Can I stop my IVA

Can I stop my IVA

An IVA is a legally binding agreement. Nevertheless, it is possible to stop and do something else if you want to manage your debts in a different way.

Included in this article:

Already in an IVA and need help?

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Is it possible to stop an IVA once it has started?

You may have already started an IVA, but then change your mind. If so, you can stop the agreement if you want.

It doesn’t matter how long you have been in the arrangement for. Perhaps you have only made a couple of payments or not yet made any at all. Perhaps you have been paying for over a year. If you believe it is not the right solution you can stop at any time.

There are various reasons why you might decide to do this. Maybe you have decided that you made the wrong decision and it is not the best solution for you. Perhaps you can no longer afford it. Alternatively your IVA company might have changed and you don’t like the new one.

You can’t be forced to carry on with your IVA if you decide it is no longer right for you. You can stop it at any time.

What do you need to do to cancel your IVA?

The way to stop your IVA is actually pretty straight forward. All you need to do is cancel your payments.

Where you are paying via direct debit, simply cancel this instruction with your bank. You can call them or use your internet banking facility to do this.

Some IVA companies take payments from your debit card. This is known as a continuous payment authority. You might be able to stop this by calling your bank and instructing them to cancel the authority. If they say they can’t, the next option is to report your card lost or stolen. The bank will issue a new card. All continuous payment authorities set up on the old one should be cancelled.

As well as stopping your payment you should also tell your IVA company that you want them to cancel the agreement. They may try to persuade you to stick with it. But if your mind is made up, there is nothing they can do to stop you.

From the date you stop making your payments it will take at least 3 months for your IVA company to formally terminate the agreement. However some can take a lot longer than this.

What are the implications if you stop your IVA?

Before deciding to stop your IVA you need to understand the implications.

It is important to understand that cancelling your IVA will not improve your credit rating. The record of the IVA will remain on your credit file for the full 6 years (from the start date) whether you stop it or not. Trying to improve your credit worthiness is not a good reason to stop an IVA.

Not all of the money you have paid into the agreement will go towards your debt. Your IVA company is allowed to take some of it to pay their fees. Because of this, you could still owe the same amount of debt as when you started. You must therefore have a plan in place for what you will do next to manage your debt. This may be starting a totally different debt solution such as a debt management plan or going bankrupt.

What about ongoing collections action from your creditors? Generally speaking it will take 6 months or more from when you stop paying an IVA for them to start collections action against you . You will therefore have plenty of time to put an alternative plan in place to deal with your debt.

One thing you don’t need to worry about is being forced to go bankrupt. In the vast majority of cases this will never happen because most banking creditors will not take this action against you. The only time it is a risk is if you owe a significant debt to HMRC. Applying for bankruptcy might however be something that you should consider doing yourself.

Want more advice about stopping your IVA and the alternative options open to you? Give us a call (0800 011 4712) or complete the form below and we’ll call you.

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6 thoughts on “Can I stop my IVA

    Sudha says:

    HI there,

    I have been in IVA from 2019 June. I did not realise that IVA could dent my credit scoring badly. I have debt about 7.5k. How can i come out from IVA please?

    Will the creditors contact me for the full payments. Can i arrange settlement plan with them? I was reading somewhere about a company that give finance to settle the payment early. Please advise.

      Hi Sudah

      An IVA makes your credit rating poor for 6 years from the start date. This should have been explained to you before you started. Unfortunately cancelling your IVA now will NOT improve the situation. Even if you cancel the negative affects on your credit rating will remain for the full 6 years.

      Given this it is not sensible to cancel your IVA purely because you want to improve your credit score. But if you want to for another reasons then yes, you can cancel it. The second section of the article above explains how you do this.

      In terms of getting a loan to settle your IVA early, I know of one loan company called Sprout who I believe offers this facility. However they will not lend unless you have already been in your IVA for at least 30 months. And it is important to remember that even settling early will NOT improve your credit rating any sooner. So really unless you have another pressing reason to settle early, I would not normally recommend a settlement loan.

    TonyG says:

    hi we have combined debt of £50000 we are in a iva already, we have a joint income of £3500 and our expenditure is £3150 the iva company have said our repayments are £542 a month could you please tell me if this sounds correct, thanks

      Hi Tony

      If your household income is £3500 and legitimate living expenses budget totals £3150, your monthly household disposable income is no more than £350/mth. As such, there is no way you can afford to continue paying £542/mth into your IVA. I assume that your circumstances have changed since you started the Arrangement and your income has fallen or or living expenses have risen as a result?

      My advice is you need to speak to your IVA company asap and ask to do a full review of your income and expenses budget. If you truly can’t afford £542/mth you need to discuss the option of reducing your payments. This might be possible as long as a reasonable monthly amount remains affordable. However be aware that reducing your payments normally comes hand in hand with a 12 month+ extension of the IVA.

      If you can’t agree a reasonable way forward with your IVA company, you could then consider cancelling the agreement and using a different debt solution. However before doing this you should get more advice. If you want to chat through your options, feel free to give me a call (0800 011 4712)

    Caroline says:

    Hi, I am 12 months into a iva. Ive got to pay half of my overtime every month. The trouble is some months my overtime can be 800. As people dont want to work i am doing all the overtime to help out my company. The thing is now if I have to pay them back all this extra overtime i could end up paying more money than I owe on the debt. Can I fail my IVA

      Hi Caroline

      If the amount of overtime you are doing means that you might pay more back into your IVA than you originally owed, then clearly the Arrangement is no longer suitable for you. It makes no sense to remain in it.

      In these circumstances it is certainly possible to let your IVA fail. As discussed in the above article, all you need to do is stop making the payments. Then tell the company running the agreement that your circumstances have changed and you want them to terminate it.

      The termination process will take at least 3-6 months. During this time you can save your funds. Then you will be able to make your own arrangements with your creditors to pay or settle your debt.

      The only thing to be aware of is that most (if not all) of the money you have paid into your IVA over the past 12 months will be lost. It will be retained by your IVA company to pay their fees. However, given your income has gone up so significantly, even this makes sense compared with continuing your payments and paying significantly more.

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