What should I do if I can’t keep up with my IVA?

If you are finding it difficult to keep on top of your unsecured debts and don’t think you’ll be able to repay them in a realistic amount of time, then an IVA (Individual Voluntary Arrangement) may be a suitable way out of debt for you.

What should I do if I can’t keep up with my IVA?

In most cases, you will be required to make regular monthly payments that reflect how much you can actually afford. IVAs are legally binding agreements and usually last for 5 years. When an IVA comes to a successful conclusion, any remaining unsecured debt you have will be written off.

If you can’t afford to keep on top of the repayments, then an IVA would not be right for you. This may well be the case if, for example, you don’t have a fixed income. However, it is important to understand that no-one can predict exactly what may happen in the future, and anyone’s circumstances can change. For example, your essential expenditure may increase and/or your income may drop.

If this does happen to you, you can talk to your Insolvency Practitioner (IP) about an IVA variation.

Your IP has the responsibility of arranging your IVA. However, they are also there as a point of contact for you and your creditors throughout the agreement.

If your circumstances change, and you can longer afford to make the payments to your IVA, your IP may be able to arrange an IVA variation.

An IVA variation allows you to alter the repayment terms to reflect the change in your circumstances, so your IVA still has a chance to succeed even though your circumstances have changed. For example, your creditors might accept smaller repayments – for a longer timeframe.

An IVA variation is arranged in a similar way to your original IVA. Your IP will help you draw up a new proposal, which will be given to your creditors. Voting creditors who collectively ‘own’ at least 75% of your debt have to agree to the new proposal before the IVA variation can go ahead.

Although your proposal may outline the only way you can continue with the IVA, your creditors may still reject it. If this happens, you could:

  1. Propose an alternative IVA variation
  2. Look into a different debt solution: for example, a debt management plan.
  3. Allow the IVA to fail, and then petition for bankruptcy. Although bankruptcy has downsides, it can be the most appropriate way out of debt for some people.

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