Cancel IVA if Unhappy

10/11/2024
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.

Included in this article:

Already in an IVA and need help?

Give us a call: 0800 011 4712 or complete the form below to speak to one of our experts

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 officially terminated, you will receive confirmation of this in writing. Because you are no longer in an IVA your details will be taken off the Insolvency Register. This normally happens within 3 months of the termination date.

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.

Struggling to get your head round all of this? We can help. Call us (0800 011 4712) or complete the form below. The advice is free and confidential.

What happens to the money your already paid into your Arrangement?

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 monthly 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.

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.

Need help with cancelling your IVA? Give us a call (0800 011 4712) or complete the form at the bottom of this page. The advice is free and confidential.

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122 thoughts on “Cancel IVA if Unhappy”

    Charl says:
    07/01/2021 at 13:05

    I cant afford my iva with current company which is terrible by the way. i want to cancel and move to stepchange. how do i do this?

    Reply
      James Falla says:
      07/01/2021 at 13:23

      Hi Charl

      You can cancel your IVA if you wish. The process for doing this is outlined in the article above. However you must remember that you can’t “transfer” your current IVA to Stepchange. You have to stop the original IVA and then start a brand new one with Stepchange or start a debt management plan with them to manage your debt.

      The other thing to bear in mind is what happens to the money you have already paid into your IVA. Some of this will go to paying your current IVA company’s fees. Depending on the amount you pay each month and the time you have been in the agreement, it could be that all the money you have paid in goes to your IVA company and you will still owe the same amount as you did at the beginning.

      Reply
    NeilS says:
    08/04/2021 at 14:31

    Me and my wife have an iva that was with vangaurd and now with ebongate but we are not happy. is it possible to cancel because ive been told we were missold it,told this by a solicitor friend who urged me to seek advice

    Reply
      James Falla says:
      08/04/2021 at 14:44

      Hi NeilS,

      I understand your frustration. I work with a lot of people whose IVA started with Vanguard but have now been moved to Ebenegate who are unhappy.

      I think you will find it very difficult to successfully claim your IVA was missold. However, regardless of this, you can certainly cancel the agreement if you want to.

      You just need to be aware that some (if not all) the money you have already paid already will be taken by Vanguard / Ebenegate to cover the fees and costs they have incurred. This is standard legal practice. As such you are likely to be left still owing a considerable amount of your original debt and will need a plan for how you will manage this going forward.

      You could consider starting a new IVA. However, this would mean starting from the beginning again. Alternatively, if you are not homeowners, what many people in your position do is go bankrupt.

      If you would like further advice about your options and the best thing to do, please give me a call (0800 011 4712). I would be happy to go through things with you. This is free and without obligation.

      Reply
    Megan says:
    08/04/2021 at 18:14

    Hi. Im currently in an iva with hanover and now wanting to cancel and go to stepchange for an dmp, can i do this?

    Reply
      James Falla says:
      08/04/2021 at 18:22

      Hi Megan

      Yes, you can cancel your IVA. You can then speak to Stepchange about starting a debt management plan if you want.

      You will need to wait until Hanover formally terminate your IVA before Stepchange can start a DMP for you. This could take 6-9 months. In the meantime, you could save the money you would otherwise have paid into your IVA. Your creditors will not be chasing you as they will not know that you have cancelled until they get a copy of the termination notice from Hanover.

      Remember, depending on how much your payments were, Hanover will take some (possibly all) of the money you have already paid into your IVA. As such you might still owe the same amount as when you started. You therefore need to think carefully before choosing to go down this route.

      Reply
    Megan says:
    13/04/2021 at 11:27

    Thank you so much for replying. I definitely want to cancel my iva but Hanover said that I need to put it in writing but I’m unsure what to write as they now said they can decline my termination.

    Thank you
    Megan

    Reply
      James Falla says:
      13/04/2021 at 11:33

      Hi Megan

      Don’t worry. Hanover have no legal right to decline your request to terminate your IVA. I can understand that they want you to put the request in writing so they have this on file. All you need to say is you feel the Arrangement is no longer suitable for you. No further explanation is required or necessary. Once you have sent your written confirmation (email is best), make sure you cancel your IVA payment. Believe me, once you stop paying, they will certainly cancel the Arrangement.

      Reply
    Pawrl S says:
    14/04/2021 at 00:02

    So I have been with my IVA company for almost 2 years, in the meantime one of my lenders wrote off my debt of £1061 which is almost 1/4 of my debt… However IVA company refuses to deduct it from the total amount, is there any way to forced them to deduct it?

    Reply
      James Falla says:
      15/04/2021 at 11:36

      Hi Pawrl

      The fact that one of the debts included in your IVA has been written off is actually irrelevant. It does not mean that the length of your IVA will be reduced in any way. You still have to continue paying the agreed amount for the remainder of the Arrangement. The outcome is simply that the remaining creditors will get back more of the money they were originally owed and less of your overall debt will be written off.

      Given this, there is no real point in you worrying about whether your IVA company deducts this debt or not. It makes no difference to you whether they do or don’t. That said, what they should do is ensure that they change your list of creditors to reflect that there is one less. This will then ensure that the remaining debts get a greater share of the money you continue to pay in.

      Reply

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