Featured in...
Dashboard
Individual Voluntary Arrangement (IVA)

Can I Legally Cancel My IVA? Can You Get Out?

Scott Nelson Profile Picture Janine Marsh Profile Picture
By
Scott
Scott Nelson Profile Picture

Scott Nelson

Managing Director

MoneyNerd’s founder, Scott Nelson, has a decade of financial industry experience, including 6 years in FCA regulated loan and credit card companies. Troubled by a lack of conscience in the industry, he founded MoneyNerd to give genuine advice to those in debt and struggling financially.

Learn more about Scott
&
Janine
Janine Marsh Profile Picture

Janine Marsh

Financial Expert

Janine Marsh is an award-winning presenter and a valuable member of the MoneyNerd team. With a wealth of experience as a financial expert, she's been featured on BBC Radio 4, BBC Local Radio, and BBC Five Live, and is a regular on Co-op Radio.

Learn more about Janine
· Mar 5th, 2024
Could you legally write off some debt? Answer below to get started.

Total amount of debt?

For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

Featured in...
Can I Legally Cancel My IVA

For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

Deciding whether to cancel your IVA can be a tough choice. If this is your concern, you are in the right place. Every month, more than 170,000 people visit our website for help with debt solutions.

In this article, we’ll help you understand: 

  •  The process of IVA and how to cancel it
  •  The reasons one might want to cancel an IVA
  •  What happens if your creditors and IP do not accept your cancellation 
  •  The consequences of failing an IVA
  •  Common questions about IVA

StepChange stress the need for professional debt advice, noting that 60% of adults in financial trouble hesitate to seek help.1

Our team includes people who have faced debt challenges themselves. We understand that you may be feeling confused about the IVA process or worried about how to pay off a debt.

But don’t worry; we’re here to help you understand your options.

Could you legally write off some debt?

There are several debt solutions in the UK, choosing the right one for you could write off some of your unaffordable debt, but the wrong one may be expensive and drawn out.

Answer below to get started.

How much debt do you have?

This isn’t a full fact find. MoneyNerd doesn’t give advice. We work with The Debt Advice Service who provide information about your options.

IVA Cancellation

You should talk to your insolvency practitioner for advice before taking this step. 

Remember, if you cannot afford the minimum monthly repayments on your IVA, your insolvency practitioner may be able to reduce that amount and make your budget more flexible.

You should only cancel an IVA if your circumstances are expected to change tremendously, and you can pay your debt back soon.

Don’t just contact your practitioner one day and ask them to cancel your IVA. Take your time to go over this decision with him and consult other sources for debt advice as well before finalising your cancellation.

Termination of IVA

An IVA is terminated when you stop making your repayments to your lenders. IVA termination consequences usually mean that the debt you owe still stands, and you will have to pay the practitioner the fees you owe him for their services so far. Some may charge an IVA cancellation fee.

You will have to pay back your debt. In addition, the relevant interest and statutory interest also have to be paid back to your lenders. All of your debts will still show on your credit score.

How a debt solution could help

Some debt solutions can:

  1. Stop nasty calls from creditors
  2. Freeze interest and charges
  3. Reduce your monthly payments

A few debt solutions can even result in writing off some of your debt.

Here’s an example:


Situation

Monthly income £2,504
Monthly expenses £2,345
Total debt £32,049

Monthly debt repayments

Before £587
After £158

£429 reduction in monthly payments

IVA Case Study - Comparison between £587 of average previous payments to £158 of new payments after an IVA is set up.

If you want to learn what debt solutions are available to you, click the button below to get started.

Get started

Why Would You Want to Cancel Your IVA?

If, for example, you have a long-term mental illness and it is unlikely for you to complete the IVA duration, it is pointless to demand monthly repayments from you. 

In such a case, you can talk to your insolvency practitioner and get your IVA cancelled. They can give you sound financial advice for an IVA cancellation.

In other cases, if your circumstances change and you’re expected to come up with some inheritance or extra cash soon, you can cancel your IVA and promise your lenders their repayments as soon as the windfall money comes into your hands. This is called an IVA windfall clause.

Here’s a table showing the average IVA amounts, so you can use it for reference and decide whether cancelling your IVA is the way to go.

IVA Averages Amount
Average Household Debt £32,049
Average Monthly Payments Pre-IVA £587.23
Average Duration of IVA (Years) 5
Average Payments Post-IVA £158.80
Average Savings per Month £428.73
Data from 132 verified insolvency cases of MoneyNerd readers taking out an IVA with The Debt Advice Service in 2023

How to Cancel an IVA?

Here are the ways you could cancel your IVA:

IP and Creditors Agreement 

In this method, you talk to your practitioner and creditors and explain your reason for IVA cancellation. If they agree with your case and want you to cancel the arrangement, you can only proceed with the decision. 

Remember that your lenders will only agree to the cancellation if you provide a better alternative to the IVA and promise them their money back.

Stop Making Payments

I don’t advise doing this as it can get you to court. Not notifying your practitioner before stopping repayments can become very problematic for you. Your lenders will usually come directly after you in such a case and take you to court.

Legal proceedings when you owe someone a debt can be very frustrating as the court can even order you to sell your assets to pay off your debt.

» TAKE ACTION NOW: Fill out the short debt form

Is Cancelling IVA the Right Decision For You?

If you’re a logical human being, this question will go over many times in your head:

“Should I really cancel my IVA?”

Someone with expertise in debt advice best answers this question and who is aware of your personal circumstances regarding the repayment of the debt. 

Only a person in close contact with your IVA and fully aware of your circumstances can determine whether or not it would be advisable for you to cancel your agreement entirely.

This is why it is advised to consult a licensed practitioner and explain your situation to him or her, then move forward with whatever you have in mind based on their advice.

Your practitioner is usually obligated to ensure data protection and they cannot disclose your case to anyone. 

The data protection goes to the extent that they can’t even talk about your debts or IVA hardship to someone you know. The most they can ask them for is your contact information. No one except the insolvency practitioner will know of your debt problems, so there’s no harm in taking their suggestions.

While it’s a financial arrangement at its core, the effects on a person’s mental well-being can be profound, leading to stress and uncertainty. This aspect may not be often considered, but for those grappling with the decision, it’s crucial to understand the emotional repercussions involved fully.

Source

Thousands have already tackled their debt

Every day our partners, The Debt Advice Service, help people find out whether they can lower their repayments and finally tackle or write off some of their debt.

Natasha

I’d recommend this firm to anyone struggling with debt – my mind has been put to rest, all is getting sorted.

Get started

Reviews shown are for The Debt Advice Service.

What If the Creditors and IP Don’t Accept the Proposition?

If they don’t accept the proposition, you cannot continue your current agreement until the initial agreed duration. The only way to cancel an IVA is to get all the creditors on board with the cancellation.

Frequently Asked Questions (FAQs)

What happens if I want to cancel my IVA?
If you want to cancel your IVA you should write a letter or email your IVA provider stating you want to cancel the IVA. For the IVA to be cancelled your provider and creditors must agree.
Does Cancelling my IVA Affect My Credit Score?
Yes, an Individual Voluntary Arrangement does not disappear from your credit rating for 6 years from the initial announcement of the IVA. This duration is extended if your arrangement is extended to more than 5 years.
Will I Still Have to Pay my Creditors?
Yes, cancelling your IVA doesn’t mean that your debt to your lenders end. You will have to consider some other option to pay back your debt.
Is it Really Necessary to Seek the Approval of Creditors and IP?
Yes, since the debt is owed to the lenders, it is important that their approval is obtained before taking any step to change your way of paying back the loan.
Where Can I get Free IVA Advice?
You can get free IVA help by calling the number 0800 043 40 50. Other than that, you can also check out our other articles related to IVA problems here.
Can you exit an IVA early?
Yes. You can exit an IVA early if the opportunity presents itself, I.e you receive a windfall or can make higher payments.
How do I remove an IVA?
An IVA should automatically be marked complete on your credit history but it will remain on there for 6 years.
Can creditors reject IVA?
Yes. Creditors can reject IVA if they do not agree to the terms of the proposal. An IVA may be rejected if the suggested payment plan is not satisfactory to an individual creditor.
Could you legally write off some debt?

Answer below to get started.

How much debt do you have?

This isn’t a full fact find. MoneyNerd doesn’t give advice. We work with The Debt Advice Service who provide information about your options.

References

  1. StepChange – Credit safety net report
Did you like this article?
Show your support ❤️
We're glad you liked the article! As a small team, your support means everything to us. If you could rate us on Google, it would be amazing. Thank you!
We are so sorry...

Is there something missing? We’re all ears and eager to improve. Send us a message and let us know how we can make our article more useful for you.

You can email us directly at [email protected] to share your feedback.

The authors
Scott Nelson Profile Picture
Author
MoneyNerd’s founder, Scott Nelson, has a decade of financial industry experience, including 6 years in FCA regulated loan and credit card companies. Troubled by a lack of conscience in the industry, he founded MoneyNerd to give genuine advice to those in debt and struggling financially.
Janine Marsh Profile Picture
Debt Expert
Janine Marsh is an award-winning presenter and a valuable member of the MoneyNerd team. With a wealth of experience as a financial expert, she's been featured on BBC Radio 4, BBC Local Radio, and BBC Five Live, and is a regular on Co-op Radio.