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”

    Suzanne says:
    28/05/2019 at 10:55

    I’m already in a iva but would like to change to another company and make lower payments what are my best options

    Reply
      James Falla says:
      28/05/2019 at 11:05

      Hi Suzanne

      If you are unable to afford your IVA payments then the first thing you should do is discuss the issue with your IVA company. They may be able to help you be able to help you without having to cancel your current arrangement.

      If your company is unable to help or you cannot come to a mutually agreeable way forward then your only option is to cancel your IVA and do something else. If you can afford at least £100/mth towards your debts you might be able to start a new IVA. However remember all the money you have already paid would be lost and you would be starting again from scratch. You will therefore be facing another 5-6 years of payments.

      Alternatively if you feel you will struggle to make reasonable ongoing monthly payments you should consider and alternative debt solution such as a debt relief order or Bankruptcy.

      Reply
    lauren says:
    07/06/2019 at 16:45

    Hi,

    Can I cancel my IVA because I have received inheritance and can pay off the creditors myself? the reason I am asking is because my IVA company want to charge me an extra £23k on top of my original debt to finish my IVA and this will take up the whole inheritance. Could they force me to go bankrupt if the reason I want to cancel is purely so they can’t rip me off with charging me £48k for a £25k debt?

    Thankyou

    Reply
      James Falla says:
      07/06/2019 at 17:17

      Hi Lauren

      The problem you are facing is that inheritance which becomes due during an IVA is a windfall. Under the terms of your agreement all windfalls have to be paid into the IVA for the benefit of your creditors.

      Where the windfall is large (as in your case) the Insolvency Practitioner is within their rights to charge 100% of the debt owed at the start of the IVA (less any payments you have already made). On top of this they can charge the total of their fees plus interest on the original debt of 8% per year from the date the IVA started. The fees and interest can add up to a number of thousand pounds.

      That said charging £23k on top of the original debt does seem excessive. You should demand that your IVA company gives you a breakdown of exactly what is being taken in fees, costs and interest. To give you a feel I would have thought that the fees and costs should not exceed £6000 (15% of the original debt + £1000 nominee fee + costs). On top of that the interest added should be around £2000 (8% of £25k) for each year you have been in the IVA.

      If they are charging much more than this you should ask them to state where in the terms and conditions of your agreement it says they can do so. If you feel you are being unfairly treated you can then escalate a complaint.

      Unfortunately you cannot get around paying these extra charges and costs by stopping your IVA. It cannot stop until your IVA company issue a termination letter. However they are unlikely to do this if they know an inheritance payment is due. The solicitor dealing with your inheritance will be duty bound to pay the money to your Insolvency Practitioner so it is unlikely you will be able to prevent them from doing so.

      Your best course of action is to challenge the amount being charged. However you will have pay more than the original debt owed.

      Reply
    Chloe says:
    07/10/2019 at 10:46

    I was mis sold an IVA and wish to cancel it. It hasnt gone to the creditors yet?

    Reply
      James Falla says:
      07/10/2019 at 16:33

      Hi Chloe

      You can cancel your IVA at any time whether a creditor meeting has been held or not. You simply need to inform your IVA company that you no longer wish to proceed with the application and cancel any payment mechanism you have already set up with them. You can then chose to manage your debts in a different way if you wish.

      Reply
    Cathrene says:
    16/10/2019 at 21:16

    I’ve been in IVA with Vanguard since december last year. I started with £100 monthly payment but since my circumstances have changed Vanguard increased my monthly payment to £164.50 which I think is not suitable for me.

    I am wondering to cancel my IVA and just checked documents from them but I couldn’t find anything about it. Do you think they would be able to make me bankrupt. I would like to manage my payments on my own without any extra costs.

    Reply
      James Falla says:
      23/10/2019 at 16:14

      Hi Cathrene

      If you are in an IVA and then decided it is no longer right for you, you can certainly cancel it if you want. There is unlikely to be a clause in your terms and conditions that says this but it is true nevertheless. As discussed in the above article you simply need to stop making your payments and let Vanguard know you want them to terminate the arrangement. Vanguard can’t force you to keep paying…..

      In 99% of cases you will not be forced to go bankrupt. Neither Vanguard or your creditors will make you bankrupt. You will be left to manage your debts in whichever way you decide. The only time there is a risk of bankruptcy is if one of your creditors (typically HMRC) have specifically written into your agreement that you must be made bankrupt if the IVA fails. In most IVA this is NOT the case.

      Remember: If you are thinking about cancelling and you have only been in your IVA for a year the money you have paid in will be taken by Vanguard to cover their fees. As such it is likely you will still owe the same amount as when you started. As such I would say it is only sensible to cancel if you absolutely cannot afford the increased payment or carrying on would mean you end up paying much more than you originally owed.

      Reply
    Mark says:
    30/10/2019 at 15:14

    Hi. I’ve been in Iva for 7 weeks with vanguard… I was miss sold by my nominee. I sent wage slips to him and he somehow knocked £100 a week off my wages so my payments would be smaller. also added a pay day loan onto my debt so it looked like I owed more.

    My creditors want a review every 3 month they want to see my wage slips. I know it will increase and I am going to end up paying more. I owe about £7500. my family have to lend me the money. if I fail the Iva will I owe any money to vanguard?

    Reply
      James Falla says:
      30/10/2019 at 15:24

      Hi Mark

      It sounds as though you have started your IVA under false pretences. When Vanguard do a review of your income and expenses (which will be at least annually) they will see you are earning more and will require you to increase the amount you are paying. If you think this will mean you will end up paying more than you originally owed it does not make sense to stay in your IVA. You may well be better off managing your debt with a debt management plan.

      You can cancel your IVA with Vanguard at any time. You simply stop making further payments to them and tell them you want them to terminate the Arrangement. They cannot stop you and cannot charge you any fees. If you have already made a payment into the arrangement you will not get it back.

      Reply

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