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”

    Ben says:
    23/09/2020 at 12:26

    Creditfix are refusing to cancel my iva when I told them i wanted to enter a debt relief order. Do I have a right to terminate my iva?

    Reply
      James Falla says:
      23/09/2020 at 12:46

      Hi Ben

      Creditfix can’t refuse to cancel your IVA. If you have decided to stop it and do something else, there is nothing they can do to stop you. You simply stop making your payments to them. They will then eventually be forced to terminate. See the 2nd section of the article above for more info about how to cancel your IVA.

      That said, cancelling an IVA with Creditfix can sometimes be an issue. This is because they normally take their monthly payment direct from your bank debit card (known as a continuous payment authority). You should speak to your bank and ask them to cancel this payment. However, the problem you may face is that the bank might say they can’t stop it. They will say you have to tell Creditfix to stop taking it. The issue then is that even if you tell Creditfix to stop taking the money, they still do……

      So what is the answer? One option to stop the payment being taken is to call your bank and tell them you have lost your bank card. They will then issue with a new one. This should cancel the payment authority from the original card and stop payments going to Creditfix.

      Reply
    Craig says:
    13/10/2020 at 18:57

    Hi I’ve had a small windfall can i close my iva down and negotiate a settlement fee with my crediters i had 1year left but Ebonite are just giving me the same answer every time they want all the money even though I have already paid £13k in ,i called them and they quoted me £22k to finish it then they never emailed me or called then it went up to £27k id just like to finish it off as id like to think about buying a house soon ,please can you help

    Reply
      James Falla says:
      13/10/2020 at 19:12

      Hi Craig

      If you receive a windfall during an IVA, the terms of the agreement will state that 100% of the amount you have received must be paid into the Arrangement. Windfalls you receive personally can’t normally be used to settle an IVA early. After handing the windfall over you will still have to continue making your normal monthly payments. As a result, your creditors will be repaid more of the debt they were originally owed. There is nothing you can do about this I am afraid.

      I have heard that where Ebenegate are concerned, offering a lump sum to settle is difficult. I believe they have strong links with Credit Fix. I know Credit Fix often ask for a settlement amount that is based on the amount needed to repay 100% of the original debt + their fees. It sounds as though this is what Ebenegate is asking for in your case….. As such going down this route with them may not make financial sense. If your windfall is small and you only have a year to go, I suggest your best (and likely cheapest option) is to hand over the windfall continue making your monthly payments for the next year.

      In terms of buying a house I would not worry too much. Settling an IVA early will NOT help with getting a mortgage in any way. You will still have to wait until the record comes off your credit file (6 years from the start date of the IVA). So paying a significant premium to settle early in the hope that this will help you buy a house is not sensible.

      Reply
    Paul says:
    16/11/2020 at 01:07

    Hi
    I have 20 months left on my IVA with a balance of £1,400. I made an offer of £1,000a couple of months ago to settle this, but my IVA company have declined this and will not reply to any further requests despite my continuing follow ups.

    I just want to settle this, but they are being very difficult to deal with, any advice you can provide would be much appreciated.

    Reply
      James Falla says:
      17/11/2020 at 16:03

      Hi Paul.

      It would be unusual to settle an IVA for anything less than the full amount outstanding. As such I can understand why your IVA company might have rejected your initial offer. To have any chance of settling early I think you would have to pay the full £1400. That said I am not sure why they are not responding to you now. Unfortunately the only advice I can offer you in that area is keep on trying to get through to them.

      Reply
    Lizza says:
    24/11/2020 at 17:18

    Hi James, I am in the process of applying for an IVA, the company I am using has put the proposal to the creditors and they have came back with changes, they have put a restriction on the running costs of the IVA which would mean paying for 6 years as opposed to 5? Should I go with this (is this normal?) or potentially contact a different insolvency company? Is this an option or in any way beneficial? Many thanks

    Reply
      James Falla says:
      24/11/2020 at 17:31

      Hi Lizza

      This is a standard modification that creditors often ask for. You are very unlikely to get a better deal by stopping and starting the process again with another company.

      Reply
    Salman says:
    28/11/2020 at 23:07

    Hi there ,

    I’m in my 14 day cooling off period and wish to cancel my proposed IVA. What do I need to do

    Reply
      James Falla says:
      02/12/2020 at 19:19

      Hi Salman

      If you are in your cooling off period, all you need to do is just contact the IVA company you are working with and tell them you no longer wish to proceed. They will cancel your application. That should be that.

      Reply

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