Cancel IVA if Unhappy

Cancel IVA if Unhappy

It is possible to cancel your IVA if you are unhappy. However there are certain implications that you will need to be aware of.

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Reasons you might Cancel your IVA

You might want to cancel your IVA for a number of reasons. One of the most common is if you have suffered a change of circumstances. As a result you can no longer afford the agreed payments.

Alternatively since you started the agreement you may have had more time to think about your options. It is possible that you now believe that there is a better way for you to solve your debt problem.

Finally you may be unhappy with the Company you are working with. It is not possible to transfer your IVA to a different provider. However you could cancel it and start again with a different provider if you wish.

If your income falls or expenses increase during your IVA you should speak to your IVA Company. It might be possible to reduce your payments and keep the Agreement going.

How to Cancel an IVA

If you have decided to cancel your IVA you can do so relatively easily. First stop your monthly payment by cancelling your standing order. You then need to tell the company managing the Arrangement you want them to fail it.

Generally you will have to confirm your instruction in writing. Most IVA companies will accept an e-mail but you might have to send a letter. They will then start the process of failing the Arrangement.

Once your IVA has been failed you will receive confirmation of this in writing. Because you are no longer in an IVA your details should be taken off the Insolvency Register.

Your IP is usually unable to fail your IVA until your payments are three months in arrears. During this time you are still protected from your creditors.

What happens to money paid into your IVA if you Cancel?

After you cancel your IVA your IP is allowed to draw their fees and costs from any money you paid into the Agreement. After these deductions any remaining money is paid to your creditors.

However it is likely that a considerable amount of the original debt you owed will remain outstanding. You are still liable for 100% of the outstanding balances.

Given this before you cancel you need to decide how you will manage the remaining debt. The options you might consider are a Debt Management Plan or Bankruptcy. However you could also start a new IVA

If you cancel an IVA within the first couple of years and your monthy payments were relatively low it is likely that all your original debt will remain outstanding.

If you Cancel an IVA do you have to go Bankrupt?

One of the concerns you might have about cancelling your IVA is whether or not you will be forced to go Bankrupt. In fact this would be very unusual. More often than not your creditors gain little or nothing by taking this course of action.

Even if you are a home owner your creditors will normally avoid making you bankrupt. They are far more likely to restart standard collection procedures against you such as employing debt collectors or applying for a CCJ.

The one exception is if you owe money to HMRC. They may have stipulated that if you do not meet the terms of your IVA you must be made bankrupt. If HMRC is a creditor you should not cancel your Arrangement before taking further advice.

Once your IVA has failed actually making yourself bankrupt could be a sensible option to consider particularly if you are not a home owner.

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84 thoughts on “Cancel IVA if Unhappy

    Ben says:

    Creditfix are refusing to cancel my iva when I told them i wanted to enter a debt relief order. Do I have a right to terminate my iva?

      Hi Ben

      Creditfix can’t refuse to cancel your IVA. If you have decided to stop it and do something else, there is nothing they can do to stop you. You simply stop making your payments to them. They will then eventually be forced to terminate. See the 2nd section of the article above for more info about how to cancel your IVA.

      That said, cancelling an IVA with Creditfix can sometimes be an issue. This is because they normally take their monthly payment direct from your bank debit card (known as a continuous payment authority). You should speak to your bank and ask them to cancel this payment. However, the problem you may face is that the bank might say they can’t stop it. They will say you have to tell Creditfix to stop taking it. The issue then is that even if you tell Creditfix to stop taking the money, they still do……

      So what is the answer? One option to stop the payment being taken is to call your bank and tell them you have lost your bank card. They will then issue with a new one. This should cancel the payment authority from the original card and stop payments going to Creditfix.

    Craig says:

    Hi I’ve had a small windfall can i close my iva down and negotiate a settlement fee with my crediters i had 1year left but Ebonite are just giving me the same answer every time they want all the money even though I have already paid £13k in ,i called them and they quoted me £22k to finish it then they never emailed me or called then it went up to £27k id just like to finish it off as id like to think about buying a house soon ,please can you help

      Hi Craig

      If you receive a windfall during an IVA, the terms of the agreement will state that 100% of the amount you have received must be paid into the Arrangement. Windfalls you receive personally can’t normally be used to settle an IVA early. After handing the windfall over you will still have to continue making your normal monthly payments. As a result, your creditors will be repaid more of the debt they were originally owed. There is nothing you can do about this I am afraid.

      I have heard that where Ebenegate are concerned, offering a lump sum to settle is difficult. I believe they have strong links with Credit Fix. I know Credit Fix often ask for a settlement amount that is based on the amount needed to repay 100% of the original debt + their fees. It sounds as though this is what Ebenegate is asking for in your case….. As such going down this route with them may not make financial sense. If your windfall is small and you only have a year to go, I suggest your best (and likely cheapest option) is to hand over the windfall continue making your monthly payments for the next year.

      In terms of buying a house I would not worry too much. Settling an IVA early will NOT help with getting a mortgage in any way. You will still have to wait until the record comes off your credit file (6 years from the start date of the IVA). So paying a significant premium to settle early in the hope that this will help you buy a house is not sensible.

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