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Can an IVA take my inheritance?

If you receive an inheritance while you're in an IVA, it could affect your arrangement. Find out what happens if you inherit money or assets, how windfalls are treated, and whether you'll be able to keep any of your inheritance.

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What is an IVA?

An Individual Voluntary Arrangement, or IVA for short, is a debt solution whereby you pay all of your unsecured creditors back in monthly payments usually over a period of 5 or 6 years. Once the agreement ends, a large proportion of your debts may be written off.

What is an inheritance?

Inheritance is the receiving of another person’s money or assets when they pass away. If you receive an inheritance, it will be clearly stated how much has been left to you, whether that’s a percentage of a property or a specific sum of cash. A solicitor will notify you of what has been left to you.

Will my inheritance be affected by an IVA?

If you receive an amount of cash or share of an asset from somebody’s will whilst in an IVA, you will be expected to contribute this into your plan. There is likely to be a windfall clause in your IVA that outlines this. Once you receive an inheritance, you will have to notify your IVA company.

By entering into an IVA, you are paying your creditors back less per month and they would be entitled to other sources of money, should you be able to offer it. You may find you need to sell your share of any inherited assets to pay towards your IVA.

What happens if I receive a windfall before starting an IVA?

If you have money remaining from a windfall received before your IVA, the creditors may request that you pay these funds into the IVA. In addition, if you have spent funds from a windfall before you enter the IVA, then your creditors may reject the IVA if they feel this money should have been paid to them. However, if you do have a lump sum that you can pay to your creditors, you may want to consider making an offer to all of your creditors before entering into an IVA as this may be better for you financially in the long term.

What happens if I’m waiting on a windfall?

If you know that a windfall is coming but has not been received, you may want to hold off on starting your IVA if you haven’t done already and can help it. If you cannot delay due to pressure from your creditors, you may want to explore other debt solutions to see if you will be better off financially.

Your windfall may help you pay off your creditors sooner without the need to enter a debt solution and impact your credit score. Speaking to an adviser from a debt management company will help give you an idea of what could work for you.

How much of my inheritance will I have to pay into my IVA?

You will be expected to prioritise paying back the debts in your IVA, so any inheritance money you receive should go towards paying off this arrangement.

If your inheritance can cover the entirety of your IVA debts, you will be expected to pay this off in full, along with any IVA fees. If you have leftover money after paying off your IVA, you will be able to keep this.

If you don’t receive enough to cover your IVA, you will still need to contribute this to your IVA. However, you may be able to make a full and final settlement to your creditors through your IVA if you feel you can make a suitable offer to them.

Will I be able to keep any of my inheritance?

If you receive a sum of under £500, you may not be expected to pay this into your IVA. However, you should clarify this with your Insolvency Practitioner to be sure. You may also get to keep more of your inheritance if you intend to make an emergency purchase, such as a car that will get you to work, or emergency home repairs that could put you in danger. However, before spending any of the inheritance, you should discuss this with your Insolvency Practitioner.

What happens if I keep my inheritance a secret?

This would not be wise as your IVA may fail if they found out you were withholding funds that should be added to your IVA. You would be breaching the terms of your IVA and could find yourself in a worse position by not being clear with your lenders.

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FAQs

What if I become seriously ill?

Please contact us as soon as possible. We know these conversations can feel difficult – but you’re not alone, and our dedicated Vulnerability Team is here to support you with care and practical guidance.

Your Insolvency Practitioner (IP) may speak to your creditors and request early completion of your IVA on compassionate grounds.

What happens if I come into money during my IVA?

If you receive a financial windfall – such as inheritance, compensation or lottery winnings – you’ll usually need to pay all of it into your IVA.

Because your creditors have agreed to write off part of your debt at the end of your IVA, any extra funds must be considered.

If the amount’s large, you may be able to offer an early Full and Final settlement.

If friends or family want to help with a lump sum, creditors may accept it as a settlement offer. It doesn’t have to cover everything you owe, but it must be fair and reasonable.

Can I settle my IVA early?

Yes – you can ask to offer a lump sum as a Full and Final settlement.

Your creditors will vote on the offer at a Variation Meeting.
Even if accepted, your IVA stays on your credit file for six years from the original start date.
It remains on the Insolvency Register for three months after completion or termination.

Early settlement can give flexibility, but you’ll still need to rebuild your credit after it completes.

Can I add debts to my IVA?

Because an IVA is a legally binding agreement, adding new debts can be difficult.

Forgotten debts: If a debt was missed at the start, it may still be possible to add it. Sometimes a second Creditors’ Meeting is required if the debt is significant.
New debts: If you’ve taken on new borrowing since your IVA began, contact us immediately. We’ll explain your options and what this means for your arrangement.

Can an IVA affect citizenship?

Your IVA will appear on the Insolvency Register, which may be visible during a citizenship assessment. It doesn’t automatically prevent approval – and in many cases, it reflects that you’re actively managing your debts responsibly.

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