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Unhappy with my IVA can I go Bankrupt?
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Unhappy with my IVA can I go Bankrupt?

Unhappy with my IVA can I go Bankrupt?

If you are unhappy with your IVA you can cancel it and go Bankrupt. Perhaps your IVA is not right for you or you simply cannot afford the payments.

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Should you cancel your IVA and go Bankrupt?

There are different reasons why you might be unhappy with your IVA. Having considered your options more carefully since you started the Arrangement you may simply have decided it is not right for you.

Debt payments in an IVA will last for 5-6 years. In Bankruptcy they will last for 3 years. As such if you stop your IVA and go bankrupt within the first 2-3 years you might well save yourself a considerable amount.

Alternatively you may no longer be able to make reasonable payments towards your debts. If this is the case Bankruptcy could be ideal. Where you have no disposable income ongoing payments are not required.

If you are a homeowner with equity your property might be at risk if you go bankrupt. Before deciding on this course of action you should speak to one of our experts.

How to stop your IVA

An IVA is a legally binding agreement. However you can stop it and go Bankrupt at any time. The process is actually very simple. You just need to let the Arrangement fail.

To do this you simply stop making your monthly payments. You also need to inform your Insolvency Practitioner (IP) of your decision. They will normally ask you to confirm your instruction in writing (either by e-mail or letter).

Once you have stopped paying you can go bankrupt at any time. There is actually no need to wait for your IP to formally terminate your IVA. They will normally do this within 3-6 months but you can go bankrupt in the mean time if you wish.

Instead of paying into your IVA you can save the money towards your Bankruptcy fee. Your creditors will not start to chase you until your IVA is terminated.

What happens to money already paid into your IVA?

Depending on the level of your monthly payments and particularly if you stop paying within the first 12-24 months most of the money you have paid in will be taken in fees. This is quite normal and is agreed with your creditors up front.

This means that if you stop your Arrangement it is likely that most if not all of your debt will remain outstanding.

The amount you owe will only have reduced if you have been in the Arrangement for some time or your monthly payments were particularly large.

The fact that your debts may not have reduced during your IVA is not a problem. The outcome of your Bankruptcy is the same regardless of the amount you owe.

Will your creditors make you Bankrupt?

After you cancel your IVA you might consider simply waiting until one of your creditors makes you bankrupt. In this way you could avoid paying the application fee However it is very unlikely to happen.

If a creditor makes you bankrupt they will probably not recover the money you owe them. Any money you are able to pay is likely to be taken by the Official Receiver in fees. Therefore most creditors will try to enforce payment using a debt collector and/or an Attachment of Earnings or Charging Order.

It is unusual for a banking creditor to petition for your bankruptcy. This is because it is unlikely to result in them getting back the money they are owed. As such it simply does not make commercial sense.

The only creditors likely to make you Bankrupt are HMRC or an individual you owe money to. This action is not taken to recover their debt. HMRC want to prevent the tax debts from getting worse. An individual simply wants to make life difficult for you.

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36 thoughts on “Unhappy with my IVA can I go Bankrupt?

  1. Eric helmann says:

    Am in a Iva with Hanover they have said I can’t go bankrupt until the Iva is closed and I have to pay them £2000 to close it … they said I could not include their fees in the bankrupt… so basically am stuffed !!

    1. Hi Eric

      I can confirm what you have been told by Hanover is incorrect.

      Legally you can declare yourself bankrupt before your IVA has been terminated. I have worked with many people who have done this. In fact I helped someone go through the process this week. Their IVA is not yet terminated – both the record of the IVA and the bankruptcy are now listed on the insolvency register. The Official Receiver will now simply write to the IVA company instructing them to terminate immediately. The IVA record then drops off the register.

      In terms of additional fees. Hanover will not charge you anything directly. They are allowed to retain any money you have already paid into your IVA to cover their fees. However they cannot and will not charge you any extra. If they did such a debt could certainly be included in your bankruptcy.

      I feels to me as though you are being bullied into staying in your IVA. However you can ignore Hanover. If you want to go ahead with bankruptcy simply stop paying them and you can submit the application whenever you like.

  2. Tracy says:

    Hi. I am currently in an IVA have been for a year. They have decided to increase my payments.. I do not work only get child benefit and tax credits my husband agreed to help me with it financially… but now he has changed his mind due to the fact we are having another baby.

    My IVA company says once I start getting more benefits they will want to increase my payments more.. we are already struggling and I have told them that but they don’t seem to concerned. Would it be best to go bankrupt.

    1. Hi Tracy

      Given you are not a home owner I would say that stopping your IVA and going bankrupt does seem to make sense. If you are not working and your only personal income is from benefits then you will not have to make any further payments towards your debts once you are bankrupt. Given this your debts will be written off after 12 months and that will be the end of it.

  3. Andy says:


    I’m waiting to go bankrupt, but my IVA supervisor is adamant that I can not do this until I have received my final report. In the meantime they are refusing to provide me with my creditor details and account numbers.

    You mention in the above article that I can file anyway. Is that true, as I want to get it over with asap!

    1. Hi Andy

      I confirm that you do not have to wait for your IVA supervisor to fail your IVA. I know this to be true because I have helped clients in exactly the same position and their bankruptcy application has been approved without their IVA being terminated. As such as far as I am concerned you can submit your application whenever you like.

  4. Raid says:


    I have a iva but but since it started i have also taken out another credit card with vanquis bank. I have an outstanding balance with EE mobile provider and a £400 outstanding balance with my car insurance. I also have a universal credit over payment and speeding fines. If i am declared bankrupt does this debt get wiped out as well as the IVA?

    1. Hi Raid

      If you stop your IVA and go bankrupt then yes, both the debt currently in your IVA and any other unsecured debt you have taken since starting your IVA will also be included and written off. This includes the universal credit over payment (as long as this is not the result of a fraudulent claim).

      The only exception to this in your case is your speeding fines. These are considered court fines and cannot be included. You will have to pay these.

  5. Nicky says:

    I am also with vanguard & would not recommend anyone to use them!
    I will be applying for bankruptcy.

  6. Rachel says:

    I started an IVA on May 2019. I missed a debt which takes me to double my debt. My IVA said it’s unlikely this can be added. Also now I am pregnant so September when on maternity I simply won’t be able to afford payments.

    I want to apply for bankruptcy but have been told by national debtline and vanguard (IVA company) that I can’t apply until the IVA is cancelled. But this can take 3-4 months! I have only made 2 payments. Although the included debts won’t contact for a while the outstanding debt are pressurising me and threatening with court action so I’m hoping there’s a way I can apply for bankruptcy now without it being rejected.

    1. Hi Rachel

      It sounds as though stopping your IVA and going bankrupt is a sensible way forward for you.

      I can confirm that what you have been told by National Debtline and Vanguard is NOT correct. After you have stopped paying your IVA you can apply for bankruptcy at ANY time as soon as you like. You do not have to wait for the agreement to be terminated. I have heard that Vanguard have said this to others. I am not sure why they say it as it is certainly not correct.

      I have worked with a number of people who have had IVAs with Vanguard and have had no problem going bankrupt before they get their termination letter. You can go bankrupt straight away and get immediate relief from all your creditors.

  7. Sarah says:

    I am in an IVA but have had to go part time. This has meant I am earning £400/mth less. I live with husband who owns the house and works.

    The IVA company only decreased my payments by £40. I cannot afford to pay this IVA now so am thinking about bankruptcy. Do they take my husbands salary into account with bankruptcy. Thank you

    1. Hi Sarah

      It sounds as though you have had a very large reduction in your family income. With a drop of £400/mth I would assume that on paper you would now have little or no disposable income and so would struggle to make any ongoing payments towards your debts at all.

      The issue is you cannot maintain an IVA based on no monthly payments. Your IVA company have possibly reduced the payments as low as they can to keep the Arrangement viable. However if you cannot afford this reduced payment it is not really helping you. In these circumstances stopping the IVA and going bankrupt is certainly an option to consider.

      If you go bankrupt you would need to give information about both you and your husband’s income. This would be used to calculate a household income and expenses budget. However he does not have to make any payments towards your debts with his money. Any household surplus income would be split between you and him. Only your share (if there is any) would have to be paid. If there is no surplus at all you would not have to make further payments.

      The only concern I have is that you mention your husband is a home owner. Given you are married then you are likely to have certain marital rights over this property. As such I would urge you not to proceed with a bankruptcy application before you take expert advice.

  8. Nicky says:

    Hi James

    I will definitely get in touch as it’s a real struggle & I think I need some advice

  9. Nicky says:

    I’m currently 9 months into my Iva I’m very unhappy with the company. I thought I was doing the right thing at the time & couldn’t afford to go bankrupt. I’m really annoyed because they have just taken £8500 of a ppi claim even though I had already tried to claim ppi 6 months either with no joy! I had no correspondence from them at all until I emailed regarding the ppi money only to get told some old toot. I explained if I’d got my ppi claim money I wouldn’t need an Iva but they just don’t seem to give a damn.

    Now I’m due a £500 tax refund from being self employed last year which again it seems I wouldn’t see a penny of that either this was going to pay my accountants fee. It feels like I’m being shafted every which way!! The company I’m with also lied at the beginning of my Iva saying my partner was earning £400 a month which isn’t true as she’s disabled can they do this? I had little option at the start as I was becoming ill over the stress of the debts etc & they said that this was the only way I could afford the Iva.

    1. Hi Nicky

      It sounds as though the IVA may not have been the right solution for you but when you made the decision you were under pressure so it seemed a sensible way out. You are not alone. Many people start an IVA and then realise they are not the best solution for them or they simply do not feel comfortable with the company that set the agreement up for them.

      If you want to stop the Arrangement and do something else then as highlighted in the article above you can. You just need to have a plan in place for what to do then. That may be go bankrupt or use an alternative solution if there is one more appropriate for you. If you want advice about what is best for you please don’t hesitate to give us a call (0800 044 3194).

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