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.

Included in this article:

Already in an IVA and need help?

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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

    Joanne says:

    Hi I have been in my IVA for about 2.5 years. I have recently been transferred to another company without being told first. I am not happy that the majority of my money do far has been paid on fees and not off my actual debt. I’m currently on maternity leave and my husband is out of work. My debts don’t seem to be going down and I don’t know what to do anymore.

      Hi Joanne

      It is relatively common for an IVA to be transferred to a different company half way through. Normally it happens because the original company has decided to stop trading. There has been quite a lot of consolitation in the IVA market over the past couple of years and so such transfers have been on the increase.

      If it happens you have no say and there is nothing you can do about it. Having said that it should not cause a major issue. You should be able to simply continue paying your IVA as before.

      In terms of the money you have already paid in it is quite normal for the the majority of this to be taken in fees in the first year or two (especially if you are only paying £100 or so a month). However this is not a concern. Your creditors are fully aware of it and in fact agreed to it when they agreed your IVA proposal.

      As long as you maintain your payments until the end of the Arrangement the creditors will be repaid the percentage of their debt they originally expected and any outstanding debt will be written off. You will then be debt free.

      Having said all that if given your situation you are now struggling to maintain the payments or for some reason you cannot get along with the new company this is a different issue. In these circumstances a better option for you might be to let your IVA to fail and then go bankrupt. However before making this decision you should get further advice. Please do not hesitate to give us a call here at IVA information and we will be happy to have a chat with you.

    Deborah says:

    Hi. I was contacted while looking at national debt line by Superior Insolvency Solutions. They offered to take on my debts and said I would be paying £100 a month to my debts and this would cost nothing. Is this right? I signed a electronic agreement today with them and gave them info on all all my debt and amounts owing….

      Hi Deborah

      I do not know who Superior Insolvency Solutions are. However it sounds to me as though they are a sales lead generator for an IVA company. From what you have said they were suggesting that you apply for an IVA.

      It is true that there are no up front costs to start an IVA. However it is not correct to say that it costs nothing. If you start the Arrangement fees are paid to the Insolvency Practitioner who manages your agreement. However you do not have to pay these directly. The money will be taken from the payments you make.

      That said it does not mean an IVA is a bad thing. It might be a very good way of solving your debt problem. However it is important that you understand all the implications. For example were you told that the IVA will last 5-6 years and during this time the payments you make could go up?

      When you spoke to Superior Debt Solutions did they give you advice about all the debt solutions open to you? If not then I would suggest you get more advice before making a final decision about how to deal with your debts. Do not worry that you have signed an agreement with them. This is not the actual IVA and you can still pull out at any time if you wish.

      If you want to chat any of this through or get more advice about your options please do not hesitate to give us a call here at IVA Information (0800 011 4712). We will be more than happy to give you some free advice.

    Dan says:

    Hi, I’ve been in a IVA now for about 16 months paying £80 a month for 5yrs. There’s been a month that I came out of employment because I was temping at the time an work dried up. I kept to the IVA payment an didn’t miss it.

    So when I started my new job I did some overtime an my IVA company has looked at what I’ve earned in the last year & said that I’ve gone over my 10% allowance an now I owe them £2800 pound!

    My question is if I cancel the IVA I won’t still owe that £2800 will I? If I cancel I know I’ll be starting from scratch but the amount I agreed to pay back over the 5yrs is £4800.

    Cheers

      Hi Dan

      If you cannot agree a way forward with your current IVA company then as discussed in the above article there is nothing to stop you cancelling the Arrangement.

      You will lose all the money you have already paid in. However you will not be liable to pay the extra £2800 your IVA company says you now owe. This is because this amount is simply arrears on the current Arrangement.

      As such your total debt will be the same as when you started the IVA. You will then be free to start a new IVA or consider using a different solution if you wish.

    Lynn says:

    If you are in an Iva can you contact your creditors? We have a small pension due next mont and would like to know if they would give us settlement figures and see if we would be better off.

      Hi Lynn

      You cannot not contact your creditors while you are in an IVA. The relationship between them and you is being managed by your IVA Company. As such any offer to settle your debt MUST be made through your IVA Company.

      Important: You mention that you are due a small pension next month. What do you mean by that? Have you cashed a pension in or drawn a lump sum down from your pension. If you have done this without prior agreement from your IVA company any money you receive will be treated as a windfall. It will have to be paid into your IVA in addition to your ongoing monthly payments. You will not be able to use it to settle the IVA.

      It is possible to settle an IVA with money from a pension. However the only way you can do this is by agreeing the deal with your IVA Company BEFORE you get the money. This is because you cannot be forced to draw money from a pension.

      If your IVA company say the settlement cannot be achieved for any reason you then simply do not take the pension money. As I mentioned above if you go ahead and get it anyway you will lose the lot as it will be a windfall.

    Loz says:

    If you cancel an Iva by stopping the payment I presume the companies you owe will be in touch…. Could you then offer a monthly payment rather than a lump sum or going bankrupt? If this is possible once you cancel the Iva and you say it could take 3 months is it best to get in touch with companies you owe or wait for them to get in touch with you?

      Hi Loz

      Once you stop paying your IVA the companies you owe money to will not be in touch straight away. They will not realise you are not paying until your IVA company writes and tells them. This will not happen until you receive a letter saying the IVA is terminated (your IVA company basically sends letters to you and your creditors at the same time). Even after then it can take 3+ months for the creditors to update their systems and start to chase you.

      Once your IVA has failed yes of course you can offer the creditors monthly payments. Normally you are left to decide the best way to deal with your debts from then on. As highlighted in the article above you will not be forced to go bankrupt (other than in some exceptional circumstances where such action is a requirement of your IVA).

      In terms of getting in touch with your creditors this really depends on the course of action you choose. If you do decide to go bankrupt there is little point in contacting them. However if you are planning to offer them monthly payments it is best if you contact them as soon as you have received confirmation that your IVA has been terminated to get the payments agreed and started.

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