Stop IVA and start a debt management plan

Stop IVA and start a debt management plan

You are allowed to stop your IVA and start a debt management plan if you wish. This might be a sensible option for a number of reasons. However, you also need to understand the potential implications.

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

Are you allowed to stop your IVA and start a DMP?

You are allowed to stop your IVA part way through if you wish. You can legally cancel at any time and then start a debt management plan (DMP) if this is a better option for you.

The way you cancel your IVA is first, stop making the payments. Then tell your IVA company that you want them to terminate. They may try to convince you to stick with your Arrangement, but if your mind is made up, they can’t stop you.

Before you can start a debt management plan, until your IVA is formally terminated. This could take 6-9 months.

While you are waiting, you can save the money you would otherwise have paid in. Your creditors won’t try to collect their debt from you because as far as they are concerned, you are still in your IVA

Struggling to get your head round all of this? We can help. Call us (0800 011 4712) or complete the form at the bottom of this page. The advice is free and confidential.

When is a DMP better than an IVA?

There are two main reason why you might stop your IVA and use a debt management plan to pay of your remaining debt.

The first is where you will pay more back than you originally owed if you stay in your IVA. You might find yourself in this position after your payments have gone up.

Generally speaking, remaining in your Arrangement in these circumstances does not make a lot of sense.

The second reason you might cancel is where you know you are going to will get a windfall. This might be something like an inheritance or redundancy payment which you prefer not to pay into your IVA.

If you are in an IVA, any windfall money you get has to be paid into the Arrangement. When this happens, it is not paid off any faster, your creditors just get back a higher percentage of the debt they are owed.

If you stop the Arrangement and use a debt management plan instead, you will have greater flexibility. You can keep the windfall and decide what to do with the money.

Should you stop your IVA go bankrupt instead?

What can you do if you want to stop your IVA, but your will still have a considerable amount of debt to pay off? This might take a long time using a debt management plan?

If you are facing this problem, you should also consider the option of going bankrupt.

If you go bankrupt, you might not have to make any further payments towards your debts at all. This might be the case where your income is relatively low or just made up of benefits.

Where you can afford to make a monthly payment, you will have to do so. However, the payments will only last a maximum of 3 years. This might be far less time than a lengthy debt management plan.

That said, bankruptcy is not suitable for everyone.

You are unlikely to be able to use this solution if you are a home owner because your property might be at risk. In addition, you would not be able to keep any windfalls you receive while you are bankrupt. In these circumstances, the debt management plan option is likely to be best.

Make sure you understand all the implications before your stop your IVA. Speak to us first. Call 0800 011 4712 or complete the form at the bottom of this page.

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2 thoughts on “Stop IVA and start a debt management plan

    Lauren A says:

    Hello James,

    I spoke to yourself some months ago regarding my IVA, I spoke to you as I was having multiple issues with the IVA company creditfix. I made the decision to stop making the IVA payments for the IVA to fail, in the hope of setting up a debt management plan in replacement of the IVA which I believe would be more suitable for myself.

    I received an email in July from Creditfix providing me with an IVA breach notice and my IVA is due to fail on Monday.

    In the correspondence from creditfix it mentions the fact that the IP could petition for my bankruptcy when my IVA fails. I was just wondering what the likelihood of this happening is? My debts in total are £7,500 ( £5,400) in the IVA with fees and none of my debts within the IVA are above £5,000 individually, I did read that if the individual debts within the IVA are less than £5,000 then I cannot be made bankrupt, I just wondered if this is true? And when is the best time to start setting up the DMP, do I need to wait for any form failure certificate from Creditfix before I can do this?

    Many Thanks in advance for any advice


      Hi Lauren

      I confirm that your IP can’t petition for your bankruptcy because you do not owe them any money. It would have to be one of your creditors. However, it is true that if non of your individual debts is greater than £5000, they can’t take this action.

      Even if any of the debts was greater than £5000, it is almost certain that non of your creditors would petition for your bankruptcy as it would not be in their interest so you don’t have to worry.

      You can read more about this by clicking on this link: Will you be forced to go bankrupt if your IVA fails?

      In terms of setting up your DMP, I confirm that you do have to wait until you get your confirmation of termination letter in the post from Credit Fix.

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