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What Happens if I Stop Paying My IVA?

One question potential IVA clients ask is “What happens if I stop paying my IVA”?

An IVA can be a great way to take care of outstanding debt but maintaining an IVA requires careful planning and discipline.

There’s a chance that you won’t be able to make your monthly payments due to unanticipated costs or circumstances beyond your control.

Your IVA may fail if you don’t pay on time. In this article, we discuss what will happen if you stop paying your monthly instalments towards your IVA.

Late Payments 

You should contact your Insolvency Practitioner if you are unable to make your payment on time, and explain the situation.

Ask them if they’ll allow you to pay later. If you have a reasonable cause for paying late, your Insolvency Practitioner (IP) may accept it. If you don’t notify your Insolvency Practitioner of a missed payment, they will send you a notice of breach asking for an explanation and requesting the owed amount.

It’s critical that you make this payment as soon as possible. The majority of IVAs allow three months for you to respond to the notice of breach. If you comply with the request within three months, your IP will not take action against you.

If you do not make the payment within three months, your IP may take additional actions depending on the situation. If you explain your financial situation to them, they may lower the monthly amount you pay under the IVA. If you have not been responding to your Insolvency Practitioner or the notice of breach, then they will most likely end your IVA and send you an IVA termination certificate.

What Will Happen if I Don’t Make a Monthly IVA Payment?

If you have struggled to make your monthly IVA contributions or if you have missed a single payment, it is important to get in touch with your IP as soon as possible.

No matter the length of your financial difficulties, they will be able to help you with your payments. If you don’t keep your Insolvency Practitioner updated with your circumstances and continue missing payments, then your IVA is very likely to fail.

Contact your IP if you’re having a temporary financial difficulty that isn’t permanent and they may be able to help you get a payment break. Or possibly accept reduced payments.

An emergency is something that can’t be planned for, like your car unexpectedly breaking down. If you need a payment break in your IVA, please note that it must have been made under the IVA protocol. It is also worth noting that usually you can only have a payment break for 3 months throughout the arrangement.

If your IVA was not made following the IVA protocol, then you’ll have to consult the terms of your IVA to determine whether it allows for lowering payments in the event that your financial circumstances change.

Be sure to have solid justification and evidence for why you’re struggling to make your IVA payments when contacting your IP. Only then will they be more likely to work with you and help you out.

Bank statements, a letter or the receipt for an emergency purchase you may have had to make might be evidence.

Depending on if your IVA was registered under the protocol or not, you will be given different types of help. The majority of IVAs are created under the protocol, but in case you’re unsure, please ask your IP. If your payments drop, it’s worth noting that the length of your IVA may lengthen.

If your Individual Voluntary Arrangement was made under the IVA protocol, then your insolvency practitioner has the right to reduce your monthly IVA payments by up to 15% without having to seek permission from your creditors. If you want to lower your payments by more than 15%, then you’ll have to ask your creditors for permission. They may charge a fee or not agree entirely.

Failure to reach an agreement with creditors about lowered payments will result in the failure of your IVA.

In this case, you’re going to have to find another solution to take care of your debt. 

What Happens After a Failed IVA? 

If your IVA does not work out, then your IP will send you a termination letter with a failure report detailing how much money has been paid to your creditors and how much is left to pay. This can help you figure out what steps to take next in regards to taking care of your debt.

Don’t forget to communicate with your creditors once your IVA arrangement has been terminated – you don’t want them taking any legal action against you!

Remember that your IVA will be terminated, so you’ll have to interact with your creditors in order to prevent them from attempting to file for bankruptcy. Your IVA will also show on your credit report as “failed.”

Even if your IVA fails, you might still need to pay some additional fees that are related to your IP.

My IVA Failed. What Should I Do Now? 

If your IVA has failed, it can be discouraging, but don’t panic. If you owe money to multiple people, keep them all updated on your situation and let them know that you’re working on other ways to pay off your debt by taking further debt advice.

There are several different debt solutions beyond an IVA that you might choose from. The following are a few examples:

  • A debt management plan (DMP). While this cannot guarantee that your interest rates and charges will be frozen as an IVA does, it will still enable you to pay off your debt affordably each month. If you dedicate yourself to sticking with the plan, then you might be able convince your creditors to enter into another IVA with you down the line. 
  • Bankruptcy. If your IVA fails, your IP and/or creditor(s) will most likely seek to have you declared bankrupt. While this may appear to be a negative event, it might actually be beneficial in certain instances. Bankruptcy allows you to totally wipe out your debt. Your belongings, on the other hand, are not safeguarded. They will be taken and sold off as soon as possible. If you don’t possess a lot of property, such as a house or automobile, bankruptcy may be worth considering since it can help you get rid of your obligation quickly without selling any assets. 

Citizens Advice also have an article here.


Although Individual Voluntary Arrangements are quite flexible, it is essential to be conscious of your monthly budget in order to make payments on time. If you stop paying your IVA for any prolonged period of time without a justifiable explanation, the arrangement will most likely fail. For free debt advice contact us on 0800 169 1536.

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Customers can get free debt advice from the Money Advice Service – an organisation set up by the Government to offer free and impartial advice to those in debt. For more information from the Money Advice Service visit MAS is part of the Money & Pensions Service. We are not affiliated with MAS in any way.

Become Debt Free is a trading style of Re10 (Finance) Limited Registered Number 04651137.  Data Protection Act Registration Number – Z8613095

Become Debt Free specialise in providing and administering Individual Voluntary Arrangement (“IVA”) solutions to individuals based in England, Wales and Northern Ireland.  We do not administer Debt Management Plans, Debt Relief Orders, or any other debt solutions.  We only provide advice after completing or receiving an initial fact find where the individual(s) concerned meets the criteria for an IVA, therefore, all advice is given in reasonable contemplation of an insolvency appointment.

* To qualify for debt write off in an IVA with us, you must have a minimum of £7,000 of qualifying unsecured debt owed to two or more creditors.  The amount of debt write off is based on your own personal circumstances – typically this could be up to 85% of what you owe; and this has been achieved by over 10% of our customers who have successfully completed their IVA’s in the last 12 months.  The amount of debt write off differs for each customer and is dependent upon their individual financial circumstances and subject to the approval of their creditors.

Andrew Bowers is authorised in the UK to act as Insolvency Practitioner by the Insolvency Practitioners Association.


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