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”

    Husna Begum says:
    05/07/2020 at 19:24

    Hello,ive been in an iva for a year now and have to do my yearly expenditures form I’m worried because my modification to my iva was for me to work and I still don’t have a job

    Reply
      James Falla says:
      07/07/2020 at 16:50

      Hi Husna

      This does seem to be an unusual modification. However if this what the agreement states I assume there must be provision for what happens if you are unable to find a job. In these situations the current status que should continue. I suggest you speak to your IVA company asap and let them know your circumstances have not changed. I would hope there would not be an issue.

      Reply
    JSmith says:
    01/08/2020 at 08:50

    I have taken out an IVA two years a go. My debt was £16,089.00 not including the supervisor fee and nominee fee. Within the two years my wages increase and expenses decrease which allows me to increase my payment from £102 to £700 a month. When I pay £14,336.00 into my IVA, I called and emailed to find out my balances and how much more I have to pay off.

    THEY INFORMED ME THAT I HAVE £16,800.00 REMAINS TO PAY. My debt was £16,089.00, I have paid £14,336.00. OVERALL I WILL BE PAYING £31,136.00.

    When I ask why do I have that remaining to pay when my debt was only £16,089.00 they said something about dividends and I will be paying more then I owe.

    At the beginning of the agreement HANOVER let me know IVA will be better for me and I ask over the phone; “do I need to pay more then my debt and can I pay it off early? ” He informed me just the admin fee and once all my debt is paid off I do not need to pay anything else.

    Reply
      James Falla says:
      02/08/2020 at 11:58

      Hi JSmith

      Your problem is due to a commonly misunderstood fact about IVAs (and it seems that Hanover may have misinformed you about this). If you start an IVA your payments can increase if your surplus income increases (which is what has happened in your case). However the increase does NOT mean that your IVA is paid off faster. The terms of most IVAs state that where possible during the Arrangement you must pay up to 100% of your original debt PLUS the IVA company fees and costs PLUS interest at 8% pa on your original debt. This is not just a small increase for an “admin fee”. It is possible to end up paying thousands more than you originally owed.

      This situation is uncommon. It has happened in your case because your surplus income has risen by so much. You now have two options. You carry on with the IVA and pay £16800 more. Or if you wish you can cancel the agreement and pay off the debt yourself. You should ask your IVA company to confirm how much of the money they have collected from you so far has been paid to your creditors. You will then be able to see what you will be left to pay if you cancel the arrangement.

      Note for others in a similar situation: If your surplus income increases significantly during your IVA, contact us immediately. We can give you independent advice regarding what the impact will be in terms of the amount you will end up paying and whether stopping your IVA and doing something different is a better option for you.

      Reply
    Shaun says:
    07/09/2020 at 15:11

    Im currently in a Iva with vanguard who have been taken over by ebenegate our clutch has gone on our car 10 years old and is beyond repair. We are trying to get finance on a new vehicle and need approval from the IVA to get the car they seem to be holding back can we transfer the IVA to a new one to get the car we are desperate to get a car for work

    Reply
      James Falla says:
      07/09/2020 at 15:22

      Hi Sean,

      It is not possible to change your IVA company. The IVA company itself can change (as has happened in your case with the management of your Vanguard IVA passing to Ebenegate) but you can’t switch yourself.

      I understand Ebenegate have been managing Vanguard IVAs since the 17th Aug. It has only been a couple of weeks so they are probably struggling with the change themselves at the moment. I would suggest waiting a couple of weeks more and then speak to them again.

      If this does not work or you just can’t wait, the only option available to you is to consider cancelling the IVA. If you did this, you could then arrange new car finance if you can find a company who will work with you (you will need to use a sub-prime lender). However, as a result you will likely be back to square one with your debt. It is only really a good idea if you are not a home owner and can consider going bankrupt which would then write off your debt once and for all.

      Reply
    Stephen says:
    12/09/2020 at 17:13

    Hi I’ve been in a joint IVA for 14 months but my own debts are 25000 to whch I pay £317 a month so in total I will pay back about £13600 over 5yrs. I have recently received a refund in ppi off £9300 which I know has to be paid into my ppi, Should I just pay it and still pay £317 for another 46 months. What options do you think I have as I feel this money could help pay my main creditor and then to phone up the other creditors to make a payment plans and pay back in less time.

    Reply
      James Falla says:
      17/09/2020 at 15:31

      Hi Stephen

      If you are awarded PPI compensation during your IVA you MUST inform your IVA company and hand over the funds to them. It must be treated as a windfall and paid into your IVA in full. You will then have to continue paying your IVA payments as normal. The outcome is simply that all of your creditors will be paid back more of the debt they are owed. Your IVA company can’t pay one creditor and not the others as this would be a preferential payment which they are not legally allowed to do.

      Reply
    Samantha says:
    17/09/2020 at 19:57

    Hi there

    I am cancelling my IVA because my circumstances have dramatically changed since I began the agreement.
    I am wondering how long it will show on my credit rating that I have had an IVA? Do I need to contact the credit agencies myself to have this information removed or will it stay on my account for the full 6 years?
    Many thanks
    Sam

    Reply
      James Falla says:
      18/09/2020 at 17:04

      Hi Samantha

      If you cancel your IVA, the record that it existed will still remain on your credit file for the full 6 years from the start date. There is nothing you can do about it I am afraid.

      Have you thought about how you will deal with your outstanding debt moving forward? If you would like to get some advice and discuss your options, please give me a call (0800 011 4712). I would be happy to help

      Reply

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