Cancel IVA if Unhappy

22/03/2023
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”

    Gary says:
    05/09/2018 at 12:39

    I am currently 2yrs into an IVA, payments originally started at the 200 mark (year 1) after a change in circumstances raised to 500+ and following a further change are now at 330. when at 500 I cancelled the payment as it was unsustainable, as I was paying this following the second change. I have not made any of the 330 payments yet and I am now 3 months in arrears.

    I have asked for additional child maintenance payments to be taken in to account for which I sent in a confirmation letter from the childrens mother. also on the original agreement smoking was not included even though I specified it. I carried on with the payments in year one (without smoking included) as at the time was affordable. can I get this added as they say not as not on original proposal?

    I am currently finding it extremely difficult to find the 330/m required even though I am on a relatively good salary. what would be my best option, could the IVA be transferred to another provider as since another company took over communication and customer service seem to have taken a turn for the worse

    Reply
      James Falla says:
      13/09/2018 at 16:09

      Hi Gary

      Your IVA provider should be able to help you if your living expenses have increased because your child maintenance payments have gone up. However it is unlikely they will be able to add a budget into your expenses for smoking. The problem is that your creditors will not agree to this. They will argue that if a budget for smoking was not included originally then why should you suddenly need it now.

      Unfortunately if you are unable to agree a sensible way forward with your current IVA provider it is not possible to change to another. In these circumstances the only option open to you (other than gritting your teach and carrying on) is to let your IVA fail. You could then start another one with a different provider. However this would mean starting back at square one and facing 5 more years of payments. Alternatively if you are not a home owner you could consider failing your IVA and going bankrupt.

      Reply
    Tali says:
    25/09/2018 at 11:11

    We have been in an IVA with Payplan since March. In June our income increased dramatically and we now feel that a debt management plan would be more appropriate for us so that a) we have a clear end date b) we know that we will only be paying back the debt and not £1000s in fees and c) we will be paying back 100% of the debt, which is something we feel morally obligated to do, now that we are in a position to do so.
    We are currently waiting for the IP from Payplan to call us to discuss this. My question is, do you think we would be better staying with Payplan and just transferring to a DMP or should we find another provider.
    Thank you

    Reply
      James Falla says:
      26/09/2018 at 12:31

      Hi Tali

      If you can now afford to pay off your debt in full within 5 years without being in an IVA then I agree it would be sensible to cancel the Arrangement and use a Debt Management Plan. If PayPlan are happy to set up and manage the Plan for you then that is absolutely no problem. It would probably be the best option as they know your case. However if they are reluctant to continue working with you for whatever reason you could consider setting up the plan yourselves or speaking to Step Change who should also be able to set up a free plan for you (as long as you are not self employed).

      Reply
    Martins says:
    10/10/2018 at 09:01

    Me and my husband are both in IVA’s and have both recently started jobs earning more money. However, our outgoing’s have increased and there is less money in our monthly surplus, infact it is -£. Our IVA company is telling us we need to cut back even more, despite being within the amounts in the living expenses guidelines. Can they really not leave any money for a family to enjoy an odd day out or hobbies

    Reply
      James Falla says:
      12/10/2018 at 17:51

      Hi Martins

      If the change in your circumstances means that you are unable to continue paying your IVA the first thing you need to do is speak to your IVA company about the possibility of making your payments lower. This might be possible if the lower amount you can continue paying into the Arrangement is still reasonable. However you would have to expect this to go hand in hand with an increase in the number of months you have to pay.

      If you believe your surplus income is now zero or too small to be able to make viable ongoing payments then really you only have two options. The first (as your IVA company has suggested) is reduce your expenses elsewhere so that you can make the payments. However if you cannot / are not prepared to do this the only other option is to let your IVA fail and use a different debt solution. If you are not homeowners and have no surplus income your best option might be to consider going bankrupt.

      Reply
    Anty says:
    16/10/2018 at 18:54

    I get IVA in March but my financial situation changed. Getting more money now and IVA want to increase my monthly payment.

    Reply
      James Falla says:
      16/10/2018 at 19:05

      Hi Anty

      You need to remember one of the fundamental rules of an IVA is that the monthly payment is not fixed. If your income improves or your living expenses fall during the Arrangement and this results in an increase in your disposable income your payments will also have to go up.

      If your payments have increased and you are unhappy then as highlighted in the article above you can cancel your IVA and change to a different solution. This may be a good idea if the increase in your payments means you would now pay more than your original debt if you continue with your IVA. However if this is not the case you are still likely to be better off by remaining in the Arrangement.

      Reply
    Aneta says:
    15/02/2019 at 15:45

    Hi there,
    I am five months into my IVA. I want to cancel it as I can manage pay everything in one go. If I will do it will this still effect my credit rating ? If so how long for ?

    Reply
      James Falla says:
      15/02/2019 at 15:58

      Hi Aneta

      This is a very important question. If you cancel your IVA and pay off your debt or you settle your IVA early this will NOT improve your credit rating.

      The record of the IVA will remain on your credit file for 6 years from the start date. Regardless of whether you settle or stop the Arrangement the record on the file will not be changed.

      Once an IVA has started your credit rating can never be clear of it until 6 years from the start date.

      Reply

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