Windfall during an IVA

Windfall during an IVA

If you receive a windfall during an IVA you normally have to pay it into the Arrangement. As a result the amount your creditors get back increases.

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What happens to a Windfall during an IVA?

A windfall is any sum of money or asset which becomes payable to you during the course of your IVA. Common examples are inheritance; PPI compensation; funds released from the sale of a property or a redundancy payment.

If you receive a windfall the terms of your agreement will state it has to be handed to your Insolvency Practitioner (IP). The funds are then paid into the Arrangement on top of your normal monthly payments.

It does not mean that your IVA will be paid off any earlier. You will simply pay back more of your debt then first anticipated and your creditors will have to write off less.

Most compensation payments from claims you make against a third party count as windfalls. This includes claims for personal injury and PPI mis selling.

Can you keep any of a Windfall received during an IVA?

The terms and conditions of your IVA will dictate specifically what happens to a windfall. If the total amount you receive is less than £500 you may be able to keep all of it.

However if the amount is more than £500 it will normally have to be paid to your IVA Company in full. They are not obliged to let you keep any of the money.

If you have a specific financial emergency your IP may let you to keep part of the money received to pay for this. However they are not obliged to. You are unlikely to be given part of the cash just because your living expenses budget is tight.

One exception to the windfall rule is if you receive personal injury compensation for pain and suffering. You should be allowed to keep the full amount of this type of award.

Can a Windfall ever be used to settle an IVA early?

Although windfalls normally have to be paid onto your IVA there are some instances when they can be used to settle the Arrangement early. One example of this is where the amount received is large.

The funds may be sufficient to pay 100 percent of your original debt plus outstanding IP fees and statutory interest. If so the Arrangement will be completed immediately. You will be returned any excess.

Another is in the case of redundancy. Generally speaking redundancy money must be paid into your IVA. However if you are no longer able to work your creditors may accept this amount plus what you have already paid in as full settlement.

Depending on the terms of your agreement you may be able to keep the equivalent of 6 months take home pay from any rudundancy money received to support you while looking for a new job.

Is money lent from a Third Party a Windfall?

A third party such as a family member or friend may offer to give or lend you a lump sum to settle your IVA early. In these circumstances the money you receive is not considered a windfall.

This is because you are not entitled to have the money for any other reason than to settle your Arrangement. If your creditors agree your offer then the cash is made available. If they reject it is simply withdrawn.

Generally speaking the lump sum does not have to be handed over until the creditors have accepted the proposal. However to meet money laundering regulations proof will be required of the identity of the person offering it.

If your circumstances have not changed the amount required to settle an IVA will normally need to be similar to the total of your outstanding payments. However you might be able to agree a discount of 10-20%.

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8 thoughts on “Windfall during an IVA

    Martin says:

    I am in an IVA. I am receiving a refund from ppi of £300. I could really do with keeping it. Do I have to tell my IVA company about it? I am in such a dilemma about doing the right thing….

      Hi Martin
      If you receive a PPI compensation payment during an IVA it is considered to be a windfall. As such you will normally have to hand it over to your IVA company. However because the payment you are due is less than £500 you might be able to keep it. Many IVAs will have a clause in their terms and conditions stating that windfalls received of less than £500 can be retained by the debtor.

      I suggest that you review your terms and conditions to check this out. If it is there you should still tell your IVA company about the windfall but you will be able to keep it.

      If you cannot find the clause then speak to your IVA company about it and see what they say. If you get the money and do not tell them they are likely to find out anyway when they look at your bank statements at your next annual review.

    Anwar says:


    I started an IVA last year. My son is going to be 18 this year. He has a child trust fund account in his name which I have been managing. Will these savings have to be paid into my IVA. They are not mine they are for my son.

      Hi Anwar

      You do not have to worry about your son’s trust fund. This money belongs to him and not you. As such when he turns 18 he can take the cash and do what ever he wants with it. It will not have to be paid into your IVA.

    Simon says:


    I was wondering if you could provide me with some advice. I entered an IVA nearly 2 years ago following my losing my job due to incapacity following a road traffic accident. My employers terminated my contract without making reasonable adjustments so I began employment tribunal proceedings against them for disability discrimination. After discussion with my solicitors, I pursued my ex-employers for discrimination and injury to feelings only; any loss of earnings are to be pursued against the party who caused my injury in the road traffic accident and this matter is still ongoing.

    I have this week agreed a settlement of the tribunal claim before the hearing, primarily because I do not have the funds to engage counsel to represent me at the hearing.

    As the claim (and therefore settlement) does not include an element of loss of earnings, would the compensation I receive be classed as a windfall and therefore payable into the IVA?

    I would be grateful for your thoughts and advice.

      Hi Simon

      Given all the compensation you are due to receive is for “pain and suffering” on the face of it this would avoid the windfall clause in an IVA and you should be able to keep the money. However it will depend on the specific terms of your IVA.

      I recommend that you speak to your IVA company and explain what the money you have received is for. They will then let you know if you can keep it or not. If they say you have to hand it to them then you should ask them to confirm the specific clause in your terms and conditions that states this.

    Neil says:


    I have received my RAF pension just weeks before my IVA completion certificate is due.,I borrowed money from my mother to pay the last year’s IVA payments and also borrowed money to pay for business overheads namely a car and insurance.So the bulk of this windfall is owed to my mother.Will the IP see it this way?

      Hi Neil

      Sorry to be the bearer of bad news but I am afraid your IP is unlikely to let you keep this windfall. The IVA rules are very clear when it comes to pension windfalls. If a lump sum from a pension is received during an IVA it is a windfall and must be paid into your IVA for the benefit of your creditors. Your IVA company is unlikely to deviate from this unless it would be likely to leave you in significant financial hardship.

      That said you should certainly ask your IP and see what they say. However I would be fairly sure based on what you have said that they will want this windfall handed to them.

      Unfortunately you are only likely to get any of the funds if there is anything left after the repayment of your original debt in full (less payments already made) plus the IPs fees plus interest.

      Its a real shame you could not delay this pension until after getting your completion certificate.

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