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”

    Lorrie says:
    21/04/2021 at 15:43

    I have an IVA at the moment but I am unhappy with the company. if I stop my iva and start again with another company would I definately be abke to get an iva approved again

    Reply
      James Falla says:
      21/04/2021 at 16:02

      Hi Lorrie

      It is certainly possible to stop your IVA and start again with another company. The explanation given to the creditors would normally be along the lines that your circumstances have changed making the original agreement unsustainable.

      Remember, if you do cancel your current agreement, you would need to start a new IVA from the beginning. This means you would face 5-6 years more payments. Depending on the amount you are paying, most if not all of what you have already paid will be lost. It will be kept by your current IVA company to cover their costs and fees. As such your debt is likely to remain unchanged.

      For this reason, many people in your position also choose to go bankrupt rather than starting a new IVA. This is because in bankruptcy you only have to pay your surplus income towards your debts for 3 years rather than the 5-6 in a new IVA. If you are not a home owner, this is certainly an option to look at as well.

      Reply
    Nigel says:
    10/05/2021 at 18:15

    Hello. I’m in an iva. I only owed about 11k I got that in an inheritance fromy father passing. I gave that into my iva. All I’m asking. Can I cancel my iva and get my money back because I could have paid off my debt with that bit I still have to keep paying into it for the next 4 years.

    Reply
      James Falla says:
      10/05/2021 at 18:21

      Hi Nigel

      You can cancel your IVA. However, you will be able to get your money back. When you signed up for your IVA you agreed that where possible, you would pay back 100% of your debt plus the IVA company fees plus interest on your debt at 8% from the start date. As such where you get a large windfall like you have done, it is possible that you will end up replaying more than you owed.

      That said, if you cancel your IVA, a considerable amount of the money you have now paid into it should go towards your debts. As such you might still be better off cancelling and paying the balance owing to your creditors compared to continuing to pay for the next 4 years…..

      Reply
    Carlene says:
    18/08/2021 at 12:18

    I’ve been paying iva since feb and none of my creditors been payed what can I do

    Reply
      James Falla says:
      18/08/2021 at 12:26

      Hi Carlene

      If you are receiving statements from your creditors which do not show regular payments from your IVA this is usually nothing to worry about. It is quite normal that your creditors do not get paid every month. Usually, the IVA company pays them a dividend either quarterly, half yearly or even annually depending on the terms of the agreement.

      If you are still getting letters or calls from your creditors saying they know nothing about your IVA, this is more of a concern, and you need to take it up with your IVA company. If having done this, you are still unhappy, you could consider stopping the IVA and starting again with a different company such as ourselves, or using a totally different solution. However, I would not advise this before speaking to me so I can properly understand your situation and give you better advice.

      If you would like to have a chat about your situation, please give me a call when you are free (0800 011 4712). The advice is free and without obligation.

      Reply
    Issy says:
    12/09/2021 at 14:55

    Hi currently in 3 year of Iva , I’ve paid nearly 10 grand into it , debtvwere 6500 , I’ve asked for a funds paid to date , they will not accept , I’ve stopped paying Iva , my question what happens to funds I’ve paid in ?

    Reply
      James Falla says:
      13/09/2021 at 09:59

      Hi Issy

      If you stop paying your IVA and do not come to some arrangement with the IVA company to start again, they will fail it. At this point they are allowed to deduct their fees and costs to the date of the failure. Any additional funds left over will be distributed to your creditors.

      In order to understand how much they will deduct for fees you need to look back at your IVA agreement to see how much they were allowed to charge. Failing that the only way to find out is to ask them or wait for them to send you a termination letter which should have a breakdown of what has happened to all funds.

      As a rule of thumb they will have charged a Nominee fee of c£1000 plus Supervisors fees of 15% of money paid in plus some costs (they call these disbursements). As such their charge would be around £2000 + costs.

      Reply
    Fiona U says:
    28/07/2022 at 14:57

    Hi James

    I have a few questions about stopping my IVA. I’ve seen in articles, that say if the IVA fails, my creditors can ask for my IP supervisor to make me bankrupt. In what circumstances can this happen? If I were to enter a DMP after leaving an IVA, could they still make a petition for bankruptcy?

    Thanks

    Reply
      James Falla says:
      28/07/2022 at 15:03

      Hi Fiona

      If you cancel your IVA, it is extremely unlikely that your creditors will make you bankrupt. I think the articles you have been reading are basically wrong.

      Firstly only creditors who are owed £5000 or more can apply for your bankruptcy. That normally narrows the list somewhat. Secondly, most creditors will never take this action because they know it will mean they will never be able to collect any of the debt they are owed. In fact, after an IVA is cancelled, most creditor’s would like to see you set up a debt management plan with them. They will usually welcome it.

      That said, it would actually be sensible for you to consider making yourself bankrupt after you cancel your IVA. If you are not a home owner, it is likely you will have little or nothing to lose. You will only be bankrupt for 12 months and you may not have to worry about maintaining any further payments towards your debts.

      If you would like more advice about this, please give me a call (0800 011 4712) or complete the form below. Its free and confidential.

      Reply

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