What happens if I don't keep up the payments on my IVA?
An IVA can fail if payments are missed
We receive a lot of calls and emails from the public asking; "What happens if I don't keep up the payments on my IVA?".
An IVA is a legally binding contract, if you don’t keep up with the IVA payments you can risk the IVA being failed and a bankruptcy order being made instead.
The IVA Insolvency Practitioner has systems that check the IVA payments made each month are correct. If he/she is alerted to a missed or reduced payment it can be potentially a serious situation that can result in the IVA being failed.
No one can ever be certain of what will happen in the future.
When you entered into the IVA, it was on the basis of what was known at the time. Unfortunately sometimes things don’t go as planned and your circumstances can change for the worse -and sometimes for the better!
If you are made redundant for example, or change jobs and your income is lower, it will have an impact on your ability to repay your monthly IVA payments. If this happens, you should contact the IVA Supervisor to explain your change in circumstances and they will be able to advise you what will happen next.
You may also find your circumstances have improved, perhaps you have come into money, and therefore you may be in a position to discuss an early settlement of your IVA. Again you should contact the Supervisor.
What if a change in your personal circumstances trigger a missed IVA payment.
Sometimes during the IVA period your personal circumstances may change for and you will not be able to make the contractual IVA payments. If this event occurs, the IVA Insolvency Practitioner can ask the IVA creditors if they will consider your situation and reduce the IVA payment. If you have been a good payer up until the problem then you will have a good chance.
Failure to Maintain the Agreement
If you fall into difficulty and are unable to make the payments to your IVA (e.g. you lose your job), it is possible to agree a payment holiday with the IP. The months which you miss will normally be added to the end of the agreement.
What should you do if you feel you may miss an IVA payment?
If you feel that you can’t keep with your IVA payments or you may have difficulty making a payment we advise you should contact your IVA Insolvency Practitioner as soon as possible. It is always better to tell the IP first rather than him getting angry and contacting you via default letter.
The Rules on missed IVA payments
All modern IVA proposals have standard terms and conditions that state quite clearly the rules if IVA payments are not made correctly.
The standard rule is that if three payments are made late within a 12 month period then the IVA will fail.
Common Reasons for missing a monthly IVA payment
- You lose your job
- You get another job at a lower salary
- You are off work due to illness
- You cannot afford the IVA payments
If you have a valid reason to miss an IVA payment and you need the IVA changed to account for your situation then the IP will have to convene a meeting of creditors to put forward the variation.
You need 75% of the creditors to agree to any proposed changes for them to be accepted. If the creditors decide not to allow a payment reduction the IVA will be failed or terminated.
If are would like to know what happens if you don't keep up the payments on your IVA or just discuss an IVA in general please complete the following form or telephone freephone 0800 074 6918.
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- How do I work out how much I can afford to pay per month in to an IVA? |
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- IVA - Individual Voluntary Arrangement |
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- Are there any upfront fees with an IVA? |
- Why should I consider an IVA over bankruptcy? |
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- Is there immediate relief if I do an IVA? |
- How much debt do I need to do an IVA? |
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- Can utility bills be included in an IVA? |
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- Will my landlord need to know if I do an IVA? |
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- Will an IVA affect my employment or my ability to get a job? |
- I'm in an IVA and I've lost my job, what can I do? |
- What situations would prevent me from doing an IVA? |
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- Can I exit out of my IVA before five years? |
- Under what circumstances can an IVA proposal be rejected? |
- What percentage of IVA's are blocked by creditors? |
- What happens if my IVA fails? |
- What if I can't remortgage as per my IVA proposal? |
- My husband and I are considering an IVA as a solution to our £25,000 debt |
- What happens if I change from being employed to self employed during my IVA? |
- If my partner enters an IVA will I have to sell my car because it is registered in my name? |
- What happens if my income rises during an IVA, would the creditors want all of the increase? |
- What is the minimum level of debt for an IVA? Is it 12000 or 15000 pounds? |
- Can I keep my home if my IVA is accepted? |
- Will I have enough money to live if I go for an IVA? |
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IVA's
The IVA Guide
Money Advice Direct has put together an IVA Guide based on the enquiries and questions that we receive at our helpline offices.
In the guide we cover such subjects as IVA Approval, early settlment of your IVA, missed IVA payments, IVA failure, additional debt claims and much more.
[click here for IVA Guide]
What is an IVA?
The IVA is an extremely powerful tool enabling you to clear your debt and return to a clean financial bill of health. Visit Money Advice Direct's Guide to Individual Voluntary Arrangements (IVAs).
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DANGER
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