Is it possible to pay an IVA early

Is it possible to pay an IVA early

You have the option to pay an IVA early rather than continuing with the monthly payments. However the money required can only come from a few particular sources.

Included in this article:

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Can you pay an IVA early?

It is possible to pay an IVA early after the monthly payments have started. As a rule of thumb the amount you will have to pay must be equivalent to the total number of payments outstanding. So if you pay £180/mth and have 40 months remaining, you will have to pay £180 x 40 = £7200.

You might be able to negotiate a small discount. But you will pay approximately the same as if you had continued with your monthly payments. So what is the point? The advantage is that the Arrangement will be over. From then on future increases in your income or windfalls you receive will be yours to keep.

The cash you need normally has to come from a third party. For example your partner, parents or other family member or a friend. Once the Arrangement is completed you are free to pay back what they have lent you.

You may not save much if you pay an IVA early. However any future overtime or increases in your income will be yours to keep.

Could you settle your IVA if you get a windfall?

Normally a windfall such as inheritance cannot be used to pay an IVA early. This is because the money will be simply swallowed by the Arrangement. Your standard monthly payments will continue as normal.

The only time you can pay off an IVA with a windfall is if the amount you have received is very large. The funds would need to be sufficient to pay the outstanding balance of the total original debt plus your IVA company fees and interest.

You can’t use a redundancy payment received after losing your job to pay off your IVA. You will be allowed to keep up to the equivalent of 6 months net pay. Any extra will have to be paid into the Arrangement and you continue making your payments as normal.

A windfall you personally receive will normally have to be paid into your IVA. It can’t be used to pay the Arrangement early.

Using home equity or your pension to pay an IVA early

If you are a home owner it might be possible to pay your IVA early with equity released from your property. There are options to raise the necessary funds by remortgaging or taking a secured loan.

Your current mortgage lender will probably not be able to help. You will need to use a specialist mortgage broker who will work with you to find appropriate lenders.

If you reach the age of 55 during your Arrangement you might have the option of releasing a lump sum from your personal pension. Cash raised in the way can certainly be used to pay an IVA early. However it is important you do not take money from your pension without prior agreement from your IVA company.

Interested in remortgaging to settle your IVA? Give us a call (0800 011 4712) or complete the form below.

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18 thoughts on “Is it possible to pay an IVA early

    Mark says:

    Me and my wife both have Iva and are interlocked. If I was given money to end my Iva early would this be possible or do we have to end both at the same time?

      Hi Mark

      Given you have interlocking IVAs it will not be simple to settle yours and not your wife’s. In fact there may be little point in doing this as it is likely that the remaining IVA payments would have to stay the same.

      I think the options will very much come down to the attitude of your IVA company. As such you need to discuss this with them before making any final decision about what to do.

    Adam says:

    Hi, I was just wondering if I got a loan out would I be able to pay my partners IVA off early ? Then they would pay me back?

      Hi Adam

      Yes, you are allowed to borrow money in your own name and use these funds to settle your partner’s IVA. Once the IVA is formally over (defined as when your partner has received their completion certificate) they can then start repaying you no problem. This should be 3-6 months from the date the funds are handed over.

    John says:


    I am currently in an IVA and, due to working from home due to coronavirus, have managed to save some money.

    Am I allowed to spend any of this or do I need to declare I now have savings?

    My expenses will return to normal after lockdown so it isn’t a permanent change in income.

    Thank you

      Hi John

      If you are able to save from your agreed living expenses budget you can keep this money. You would only have to declare savings if they had been made possible because your income has increased or there has been a permanent reduction in your living expenses (such as a car finance agreement came to an end). But a temporary reduction in expenses due to coronavirus does not have to be declared.

    Jakub says:


    I have just started iva in November with monthly payments of £108. I have opportunity to offer up to £8000 with founding from third party to reach earlier settlement

    Im Polish, one of my relative back home has declined health condition and need more and more support. Iva holds me back here where I’m unable to help that’s the reason behind earlier settlement

      Hi Jakub

      It may well be possible to settle your Arrangement early. However I would advise that you do not offer more than the total of your remaining payments. So based on the assumption that yours is a 5 year agreement, you have approximately 52 left to pay which would be £5616 (£108 x 52). As such you should not offer to pay more than this to settle early.

      If your IVA company demands more than this you need to think very carefully. In this situation please contact me and I will be happy to discuss your options with you (0800 011 4712).

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