IVA Closure Process: What Happens in the Last Year of My IVA?

What happens in the last year of your IVA? Your Individual Voluntary Arrangement (IVA) may be different in its requirements to another person’s IVA. The answer could depend on the offer that was made in your original proposal. It can also depend on the modifications agreed with creditors at the meeting stage or any subsequent changes or variations. If you ask the Insolvency Practitioner (IP) who supervises your IVA they should be able to let you know what is required to reach a satisfactory completion. This article explains the IVA closure process and what happens after your IVA has finished.


What happens after an IVA is finished?


After the IVA has been completed satisfactorily you are no longer liable for the unsecured debts that were included in your IVA. Your credit rating will still be impacted for a little while. As your IVA will show on the Insolvency register for about another 3 months and will still be visible on your credit reference agency file for a short while.


You no longer have any unsecured debts and are slightly better off each month. As your IVA payment has finished and you are used to living without credit facilities.


Do I always have to answer yes to the question “Have you ever had an iva?”


If you are filling in a form for something and it asks this question then it would have to be assumed that the provider of the form has decided that this question is necessary. A form usually ends with a signature where the person filling it in is signing and dating to say that it is correct. In this case, you would have to answer yes as it would be the correct answer. You could contact the organisation concerned and ask why they need to know this and whether there is a time limit on their interest but filling in the form with the correct information is all that could be suggested.


How to get out of an IVA early or cancel my IVA?


An IVA is legally binding and once in place it cannot be cancelled but it can end under different circumstances. It can be completed or it can be terminated, in either case, it will require the IP to do this.


If an IVA is completed as satisfactorily then there is no more debt to pay, the creditors, IP and person who originally owed the money have finished their agreements and any debt remaining will, usually, be written off. At this stage you should go back to your IP and ask for further explanations about the possible risks and consequences of your IVA being terminated.


If an IVA is terminated then the creditors’ original rights to pursue for the debt is restored and any debt remaining will need to be dealt with. Your creditors can once again demand payment or take further action to recover the debt. At that time you are also able to use an alternative plan for resolving your debts. You should then seek further advice as this could be a Bankruptcy petition (by you, one of your creditors or the IP), a Debt Relief Order or a Debt Management Plan.


Please note, it can be possible to finish an IVA earlier than the term to which it was originally proposed. However, since an IVA is an Individual Voluntary Arrangement and the answer would, therefore, be Individual to the terms of your proposal. If you contact your IP they will be able to advise you of the possibilities.


What would my estate have to pay back if I die during my IVA?


If the IVA was terminated creditors could then seek repayment of the full balance outstanding from your estate. However, there are other possible outcomes such as creditors agreeing to settle the IVA on the basis of the amount already paid. This is something which you will need to talk to your IP about as it will likely depend on your particular circumstances and the terms of your IVA (which may deal with this eventuality). For more information, please see our article on what happens to an IVA when you die


I completed my IVA, can I keep the money for mis-sold PPI?


Your IP has a duty to investigate all assets that may be available to the IVA estate. Mis-sold PPI compensation falls into this category. Confusingly, different IPs treat awards that are received after the IVA has finished differently. This all depends on the terms of your IVA agreement.


However, even if you do have to pay the money into your IVA, the regulatory body R3 has issued guidance that your IP cannot hold up issuing the completion certificate. This is because they are waiting for PPI award payments.


Can I creditor chase me after my IVA ends?


You should tell the creditor you have signed an IVA and give them details of your trustee. You should also contact your trustee and let them know what is happening. As they can contact the creditor and confirm you are in an IVA. They can also tell the creditor what the correct procedure is to follow.


New creditor added to my IVA, is this allowed?


The key question is whether the debt was incurred before or after your meeting of creditors and the approval of the IVA. If it was incurred since your IVA it almost certainly can’t. If it is an old debt it may be possible to include it in the IVA. But you need to get advice from your supervisor.


Can I get a loan or credit card after my IVA ends?


You may find it difficult to be approved for any type of financial product, as your credit rating will have been affected through having an IVA. A record of your IVA will stay on your credit report for up to 6 years after the IVA has started.


Will all debt be cleared after my IVA ends?


At the end of your IVA, any outstanding debt is written off. Some debts, however, are excluded from an IVA such as court fines and secured loans.


If I have cancelled my IVA, can I claim back the money I’ve paid into it?


No, you will not be able to get the money back. You should also be aware that by cancelling or defaulting on an IVA your trustee could have the right to take you bankrupt.

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