If you are currently in an IVA, you will have been (and possibly still are) in financial difficulty and have sought a debt solution to help relieve your worries. Therefore, you should think carefully before seeking to cancel your arrangement.
What is an IVA?
An Individual Voluntary Arrangement (IVA) is a debt solution that allows you to pay back your unsecured debts in monthly instalments, usually over a 5 to 6 year period. After successfully completing an IVA, any debts within the plan are written off.
When you commit to an IVA, there are terms and conditions you will have to adhere to. If you don’t keep to the terms of your IVA, your plan could fail. However, you may wish to cancel your IVA and get out of the agreement before it has concluded.
Why cancel an IVA?
You may find your circumstances change whilst in an IVA. If you suffer a loss in income or become seriously ill, you may find an IVA is no longer sustainable. You may also feel there is another debt solution more suited to your budget, such as a Debt Management Plan.
If you cannot keep up with your agreed IVA repayments, cancelling your IVA doesn’t have to be the first port of call. You can contact your Insolvency Practitioner and ask them to offer you a payment break or to work with your creditors to lower your monthly repayments.
You may be in a fortunate position where you have received a lump sum of money that could be used to pay the debts in your IVA. If you have received a lump sum, you will need to talk with your Insolvency Practitioner about how the lump sum will be treated under the terms and conditions of an IVA.
How do you cancel an IVA?
You will need to write to your Insolvency Practitioner and ask them to cancel your IVA. You could explain this over the phone, but most Insolvency Practitioners will ask you to also confirm in writing.
If you are looking to immediately stop further payments into your IVA, you can instruct your bank to cancel any standing order or direct debit you have set up. You should also confirm to the Insolvency Practitioner that you would like your IVA to be failed.
What happens if you cancel your IVA?
You can cancel your IVA but you should be aware of the circumstances that come with doing this. Your creditors will be notified and they will be able to chase you for outstanding debts and also add interest and charges again.
It’s important to understand the terms of your IVA and talk to your Insolvency Practitioner if you have any concerns or questions.
If you cancel your IVA, you could enter another debt solution, like a Debt Management Plan. If you are seeking a different course of action, you’ll need to be aware that you will still have to pay back your creditors and you could end up paying more as fees and interest may be added back on.
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If you are undecided on what the best debt solution is for you, or just need debt advice, our team will be happy to talk you through what options are available.
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