Failed IVA – What happens next?
There are numerous reasons why an IVA could fail: perhaps you missed several months of repayments without discussing your reasons with your IVA supervisor, didn’t disclose all your assets in your initial application or even took out further credit during your IVA.
Whatever the reason, a failed IVA doesn’t mean you’re on your own – there are options available, and we’ll always be on hand to help you find your next steps.
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What happens if I fail my IVA?
If you were to fail your IVA, your IP would send you a letter of termination and a failure report. The report would include information about your creditors and how much they have been paid so far as part of your IVA. Your IP will inform your creditors that your IVA has ended but it will be up to you to arrange another method of repayment – failure to do so may lead to your creditors applying for your bankruptcy.
Your IP will also inform the Insolvency Service about the failure of your IVA, and it should be removed from the Insolvency Register three months after it failed. Your IVA will be marked as failed on your credit file also but it will stay on your record for six years from the date of approval so although your IVA has ended it will still affect your credit score.
It is important to note that if you are worried about your IVA failing, perhaps you’ve missed a payment or your situation has changed, you should contact your Supervisor immediately. They will be able to offer advice and support as to your options but it may be possible to reduce your payment amount or take a temporary payment break while you get back on track.
Will I still have to pay the IVA fees?
No. In a PayPlan Partnership IVA your fees are deducted from your monthly payments so you only pay the monthly amount it was agreed you can afford – this money will be used to cover the fees and then distributed to your creditors.
If your IVA fails, at whatever stage, you won’t be required to pay any IVA fees, you will just be left with the remainder of the debt owed to your creditors.
What should I do in case of a failed IVA?
All is not lost if your IVA fails. The first thing to do is to contact your supervisor. They will arrange for a debt advisor to discuss alternative debt solutions with you, based on your circumstances and future aspirations, which could still support you and help clear what you owe. Here are a few options you may find yourself considering:
- Set up a DMP (Debt Management Plan) – A DMP doesn’t guarantee your interest rates or charges are frozen but it does allow you to still work on paying a set monthly amount to your creditors and paying off your debt over time. If you stick closely to your agreement you could potentially persuade your creditors to agree to another IVA with you in the future.
- Petition for your bankruptcy – Declaring yourself bankrupt does allow to write your debts off. However, in return you will be required to sell your assets as a way of raising money to repay your creditors – this may include your home and car, and if you can afford to do, make monthly payments into the bankruptcy for up to three years.
Remember: You’ve still got options even with a failed IVA
If you have failed your IVA, don’t despair. There is always an alternative solution to consider and here at PayPlan we have a team of advisors who can help with this sort of situation – we offer free advice over the phone or online, so don’t hesitate to get in touch.
*In the case of a one-off lump sum settlement