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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 you have decided the IVA is not right for you or you can no longer 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 your property might be at risk if you go bankrupt. Speak to us before deciding to cancel your IVA (0800 044 3194).

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 this is very unlikely to happen.

The only creditors who will ever consider making you Bankrupt are HMRC, a trade supplier (if you are self employed) or an individual you owe money to because they bear a grudge against you.

This is because nine times out of ten once you are bankrupt it is unlikely your creditors will recover the money you owe them. Any money you are able to pay is likely to be taken by the Official Receiver in fees. As such it simply doesn’t make commercial sense.

If you own money to normal banks and credit card companies it is very unlikely they will make you bankrupt. You will need to do it yourself.

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Comments 82

  1. SarahH

    Hi there, if I cancel my iva which I have been in for 4-5 months what happens about the set up fees etc so I have to pay or would this be included in the bankruptcy??

    1. 19.07.2021

      Hi Sarah

      If you cancel your IVA, your IVA company will retain the payments you have already made to them to cover their fees and costs. However, you stop paying them any further monthly payments and they can’t charge you any additional money.

      If they did try to charge you anything (which they definitely won’t) you would include this as a debt in your bankruptcy, so you have nothing to worry about.

  2. John

    I’m currently in an iva. I have been in this for 3 years now and got another three years left. The IVA company are asking for my bank details pin number and now they want to access my bank direct to get statement. I am not happy with this arrangement. Could I apply for bankruptcy due to this? In the last year I have changed Jobs as a care support worker due to lockdown I have had to do more overtime would this affect bankruptcy many thanks.

    1. 22.03.2021

      Hi John

      You must never give your bank card pin number to anyone. Certainly not your IVA company.

      From what you have said I assume your IVA was with Vanguard and has now been moved to Ebenegate. Ebenegate are part of Credit Fix and they normally require ongoing payments to be taken directly from your debit card (known as a continuous payment authority). However you do not need to give them your PIN to set this up. They also do their annual reviews automatically by accessing your bank details (with your permission).

      If you are unhappy with this, you do have the option of cancelling your IVA and going bankrupt (assuming you are not a home owner). The fact the you have done overtime in the last year does not affect this option. Remember, if you continue to do overtime and this means you have a surplus income each month, you still need to pay this towards your debts if you go bankrupt. However the payments last a maximum of 3 years and would go down if your income falls (for example the overtime is cut).

      If you want to discuss the option of bankruptcy and how it might affect you specifically, give me a call here at Bankruptcy Expert. I would be happy to have a chat to you (0800 044 3194)

  3. Sharon

    Hi there – my IVA company said I need to wait for confirmation of the IVA failing before I go bankrupt, is that true?

    1. 16.03.2021

      Hi Sharon

      No it is not true. If you decide to, you can stop paying your IVA and go bankrupt any time (even the next day if you want to). There is nothing your IVA company can do to stop you. I have worked with many many people who have done just that. You never have to wait for your termination certificate to be issued.

      Many IVA companies will say you have to wait because they are trying to put you off from cancelling your Arrangement as it means they will lose money. The types of companies that tell you this rarely have your best interest at heart……

  4. Tracy

    If I chose to cancel and go bankrupt would it affect my partner and do they take his income into account when working out if I have to pay anything extra?

    1. 15.03.2021

      Dear Tracy

      On the face of it your partner is not implicated if you go bankrupt. His assets and credit rating are not at risk.

      Whether or not his income has to be declared on your application depends on your circumstances. Normally you have to do a household income and expenses budget if your finances are intertwined (for example you have a joint bank account, you have children etc).

      In this situation he would have to declare his income. However, his share of any household surplus is his to keep. He does not have to contribute towards your debts.

  5. Ryan

    Are bankruptcies as bad as people make out as IVA companies seem to make it sound bad?

    1. 10.03.2021

      Hi Ryan

      This is a very good question. The answer is it depends on your circumstances. If you are not a home owner and do not have an expensive car, then bankruptcy could be a far better option than an IVA.

      Ultimately both solutions are the same in terms of privacy and affect your credit file for the same length of time.

      It is not right, but I have come across IVA companies who try to “sell” the IVA solution by putting a positive spin on IVAs and a negative spin on bankruptcy. Ultimately, they do this because an IVA is where they will make most money from the client.

      That is not to say an IVA is a bad solution. It is an excellent solution in the right circumstances. The same however, can be said for bankruptcy. They are just right for different people in different circumstances.

  6. Gavin

    Hi. I’m currently in an IVA and still owe around £9000. As it stands I can’t afford the monthly repayments and think it would be beneficial for me to go bankrupt. Am I able to do this?

    1. 08.03.2021

      Hi Gavin

      If you are unable to afford your IVA payments and can’t negotiate lower ones with your IVA company, cancelling your IVA and choosing a different solution is certainly an option.

      If you are not a homeowner, going bankrupt might be a sensible option for you. If you have no surplus income you would not have to make any further payments towards your debts.

      Given your debt is less than £20,000 you should also consider the option of a debt relief order which would give you the same benefits as bankruptcy but would be much cheaper to implement.

      I would suggest not making any decisions until you get further advice. By all means give us a call (0800 044 3194). We would be happy to discuss your options.

  7. De

    I have IVA for 9 months now, but I want to go bankrupt as I have more depts what is not showing on my approved IVA but I have a car what is worth about £3500 would they say I need to sell it? I need car for work, thanks

    1. 01.03.2021

      Hi De

      If you go bankrupt you will not be allowed to keep a car worth £3500. It does not matter if you need it work or not (unless you are self employed and it can be classed as a tool of your trade). If you just go bankrupt, the OR would require you to pay £2500 to keep it. Alternatively, they will sell it and give you £1000 from the proceeds to buy a replacement.

      Alternatively you could sell it before you go bankrupt as long as you get market value. Then buy a replacement for max £1200. You can use the remainder of the money pay for a full service and MOT and insurance. You can also pay for the cost of going bankrupt. Any money left over would have to be handed to the OR.

  8. Jake

    Hi, I’ll have been in my IVA 2 years in April 2021. I’m really struggling with the payments, I have tried to get a reduction twice and been refused, there seems to be no room for me to afford things like new clothes and car maintenance/repairs. I’ve managed to get a payment break to cover some repairs but it’s not a great situation.

    I want to go bankrupt but I have some worries. Firstly my wife is concerned we’ll be evicted from our privately rented house, we have a good relationship with the landlord but not sure if this will make any difference or what the deal is with eviction after bankruptcy.

    Secondly, my payments are nearly £400 a month, I know you can’t advise what any bankruptcy payments would be but what’s the range in reduction people have seen going from Iva to bankruptcy? The whole thing is starting to have a negative impact on my mental health so I’d really like to not feel like this anymore. Thanks in advance.

    1. 02.12.2020

      Hi Jake

      If you are struggling with your IVA and the company you are with won’t help, it sounds like cancelling your agreement and going bankrupt would be a sensible option for you.

      You do not have to worry about your rented property. Your landlord will not be told. So as long as you maintain your rent payments you will be able to remain in the property no problem.

      In terms of the monthly payments, it is difficult to comment without looking at your income and expenses in more detail. However I assist many people with stopping their IVA and going bankrupt. In almost every case the monthly payment is reduced significantly. As a finger in the air I would say your payments would reduce by £200/mth. I recently worked with someone who was paying around £300/mth into their IVA due to overtime. In bankruptcy they are paying nothing and will be discharged and debt free in 12 months.

      I would be happy to have a chat to you about your situation and give you more specific advice. Please give me a call if this is of interest (0800 044 3194).

  9. jay

    I am currently on an iva and my debt is almost doubled due to iva fees.I have been on my iva 2 years now. My payments have doubled and im not happy. I am considering cancelling it however i have savings my question is am i able to transfer my saving to a family member before i apply for bankruptcy and if so can i tell the bankruptcy it was a famy debt as apposed to them saving it for me. I am just wondering weather this is possible to avoid losing any savings. I have savings that do not exceeds the debt or reach half.

    1. 15.06.2020

      Hi Jay

      The answer to your question will depend on how much you are talking about. Given you have been in an IVA for 2 years I assume you have not been able to save a huge amount. So if we are talking about no more than a £1000 or so you don’t have to worry. You can use this money to pay for your bankruptcy if you decide to go down this route.

      However if you have a greater amount of savings this is more of an issue. You can’t protect your savings by transferring to a family member before going bankrupt. This would be a preferential payment and the official receiver would demand the return of the funds.

      As such you can use some of the funds to pay for your bankruptcy (and some other things) but any remaining funds would be lost (handed to the OR). If you would like to discuss this in more detail and the options open to you please get in touch.

  10. Dave

    I’m reading a lot of comments about monthly payments after going bankrupt. What does this mean? I just thought you could pay the bankruptcy fee and then nothing else

    1. 25.03.2020

      Hi Dave

      Once you are bankrupt the Official Receiver will review your income and expenses budget. They are looking to see if you have any surplus income. This is the amount left over after you deduct all your reasonable living expenses from your income.

      If you have a surplus, you still have to pay this towards your debts for 3 years. It is known as an IPA (Income Payment Agreement).

      The payment you make into an IVA is calculated in the same way. However a big difference between the IVA and bankruptcy solutions is that bankruptcy does not rely on you being able to make a monthly payment. If you have no surplus you will not have to make any payments at all. As such where an IVA company may squeeze you to pay as much as possible this is generally not the case in bankruptcy.

      In my experience people who move from an IVA to bankruptcy end up paying a far smaller amount towards their debt each month. This is because the official receiver is generally more generous when it comes to living expenses allowances.

  11. Ross

    Hi James , I’m considering having to go bankrupt , I understood that once the 12 month period of bankruptcy was over all debts were wiped out! However I’m just reading on your website that the OR will continue to take any disposable income for up to 3 years … have I understood that correctly?

    1. 18.03.2020

      Hi Ross

      If you go bankrupt and have surplus income then yes, you will have to continue paying this amount towards your debts for 3 years. The Bankruptcy itself will still last 12 months but the payments which are based on a separate order continue.

      Note: This only happens if you have surplus income. Where you have no surplus, no ongoing payments will be required unless your income improves during the year.

  12. Joanne

    Hi I’m currently in an Iva and have been since 2017. I’ve just started maternity leave and considering if bankruptcy is the better option for me? I’m not a home owner but would like to own my own home in the future

    1. 10.03.2020

      Hi Joanne

      If your income has fallen as a result of your maternity leave or you feel you will struggle to maintain your IVA payments then stopping your IVA and going bankrupt might be a sensible option for you.

      In terms of buying a house in the future, bankruptcy will have no worse affect on you than an IVA. The record of both solutions stays on your credit file for the same length of time (6 years). After that the record comes off and you can get a mortgage.

      Remember, if you go bankrupt now the 6 year clock will start again. In other words you are unlikely to be able to get a mortgage for another 6 years. But if you are (or arle likely to be) struggling with your IVA payments bankruptcy is probably be a better solution. If you have little or no disposable income no further monthly payments would be required.

  13. Stephen


    Me and my wife are starting iva. As ill heath has forced me to to work less hours and days. But as all our income and out goings only leave us with less than £80 a month and that is as my health is now but can change were i don’t even do 1 weeks work.

    They say its ok but after signing the contract i spoken to cab and they’ve said bankruptcy would be the best option for use we are not home owners we have a car that auto trader value it at £1250 i need it to get to work when I am working and take my kids to school. We are finding i all a mind field. Please could you give me some more guidance.

    1. 24.02.2020

      Hi Stephen

      From what you have said I believe bankruptcy would be a better option for you than an IVA. You are not home owners so your property would not be affected. You car would not be at risk. The official receiver looks at the we buy any valuation which is usually significantly lower than auto trader….. As long as in reality it is worth £1000 or less you will be fine and able to keep it.

      The key factor here is it sounds like you will struggle to afford to maintain the payments towards your IVA (even if they are just £80/mth). If you start an IVA and then can’t continue to pay it will fail and you will have wasted your time and money. On the other hand, Bankruptcy would mean far less stress.

      If your IVA company has calculated you can pay £80/mth then in my experience in bankruptcy you would pay less and possibly nothing at all. If you are asked to make payments and then your income falls again they just stop. You are still bankrupt and your debt is still written off.

      If you would like to chat this through I would be happy to do so with you. Please don’t hesitate to give me a call when you are free. This is also a good article to read: IVA or Bankruptcy which is best

  14. Susan Diaz

    Hi, I am one year into my iva I have decided to default on it and pay all the smaller debts a member of my family has offered to help me, but I have two larger bank loans that I would like to come to an arrangement to pay them back.
    My question is can I do that?

    1. 18.02.2020

      Hi Susan

      The short answer is yes. You can cancel your IVA at any time and pay the creditors off yourself (either in full or using a payment plan). It is highly unlikely they will make you bankrupt unless one of your major creditors is HMRC.

      After you stop paying your IVA you will have to wait for your IVA company to formally terminate the Arrangement before you can start negotiating direct with your creditors. This could take 3-6 months.

      That all said, remember if you cancel your IVA in the first year you are likely to still owe 100% of your original debt. As such it will only really be of benefit if you are struggling with your payments. If not I would normally advise staying in your IVA.

  15. Rebecca

    Hi, I’ve had an iva since oct/Nov 2018 it is for 6 years but for 5 of those years I pay 118 a month, I had a letter today stating I now need to pay 344 a month which I cannot afford, I am now living with my partner (they don’t no I’m living with partner) as when I got my iva I was in my own flat then I had to move back home & now me and my partner are private renting.

    Is it too late for me to go bankrupt? I don’t own a house or a car, I have no assets. Will going bankrupt affect me and my partner in the future? As we are wanting a mortgage in the next 2-6 years

    1. 23.01.2020

      Hi Rebecca

      It is certainly not to late for you to go bankrupt if you wish. Given you are not a home owner and have not car or other assets and will struggle to maintain the new IVA payments it sounds as though it would be a sensible option.

      Your partner will not be affected in any way. Their credit rating is not affect and they do not have to pay your debt. You will be able to get a mortgage in the future. However this will be difficult to do in your name until the record of the bankruptcy has come off your credit file (6 years from the start date). However this is no different than the current situation you are in with your IVA.

      If you would like further advice please do not hesitate to give me call (0800 044 3194).

  16. Danielle

    Hello, I was wondering if you could help me?

    I’m on my 3rd year of my IVA and it finishes February 2022. I am currently paying £185p/m and was earning a lot more in 2017, now I’ve lost my leading position (I’m still in my current job). However they seem to want me to pay more now I have less.

    I have been working overtime the past 9 month (roughly) and am still not earning as much as I was in 2017/2018 but they seem to want more money in which I cannot afford. Would bankruptcy be a better option for me as I only have 2 years left. What would be the pros and cons.

    1. 22.01.2020

      Hi Danielle

      Given you have been in your IVA for 3 years it would be a shame to have to stop it now. First I suggest that you have another go at speaking to your IVA company. Try to understand why they think you can afford to pay more. Perhaps it is something to do with the overtime you have been earning? You should only consider stopping the IVA and going bankrupt if you are absolutely certain that they can’t reduce the amount they are asking for to a more affordable figure.

      If you believe there is no way forward with your IVA company you could cancel and go bankrupt if you wish. However it would only be sensible if you are not a home owner and your car (if you own one) is worth less than £1000.

      Also remember you will have to give information about your current income and expenditure. If you have any surplus you are still going to have to pay this towards your debt for 3 years after going bankrupt. Therefore it will really only make sense if your surplus is truely much less than what your IVA company is asking for or nothing at all. If it is zero you do not make any further monthly payments after going bankrupt and the process lasts just 12 months.

  17. Ivan

    Hello, I’m currently on an IVA for 8 months, in the meantime I moved to a smaller city and the only job I could get was a part time. I cannot afford to pay for my iva anymore. I don’t have property or expensive assets. Also I was considering going back to my country. Do you think bankruptcy is the best option? How can I make myself bankrupt without paying the fee? Are my lenders going to chase me abroad, my debt is around 10k?

    1. 15.01.2020

      Hi Ivan

      If your debt is less than £20k and your surplus income is now lower than £50 you are likely to qualify for a debt relief order (DRO). If you do a DRO it gives the same outcome as bankruptcy (debt written off and no further monthly payments) but it costs just £90 to implement. As such this could be ideal for you.

      The only problem with a DRO is you cannot start the application process until you have a letter from your IVA company confirming that your IVA has failed and been terminated. This could take 3-6 months from when you stop paying the Arrangement. If you move away from the UK in the mean time it will then be difficult if not impossible to get a DRO.

      If you don’t want to wait you can go bankrupt straight away (you do not have to wait for your IVA to be terminated). The application fee is greater at £680 but overall this might work better if you want to move back to your home country more quickly.

  18. John

    Hi my wife is in an IVA and has been for 4 years, paying back £120. She’s filled out her expenditure form and sent it back only to be told for the remaining year she needs to pay back £655 a month. As you can imagine this is a big jump from what’s she been paying and her salary hasn’t really changed over the last 2 years.

    Even though I’m not on the IVA I still have to declare what I get paid, which also hasn’t change for 2 years, but for the last year I’ve run my own car and claimed mileage back every month. The IP doesn’t seem to be taking in to consideration to make a mileage claim I also have to spend money to do so. Is there anything you can advise? Could she look at bankruptcy? Or is 4 years to far down the road for her?

    1. 08.01.2020

      Hi John

      It sounds as though your wife’s IVA company thinks your expenses claim money is earned income. If so this is not correct and it is likely they have not fully understood the situation. Expenses should not be included as part of the surplus income calculation. Only earned income can be used to pay an IVA not extra money received to pay for work expenses (in your case the extra fuel you are using and the extra wear and tear on the car).

      Have you or your wife had a chance to speak to the IVA company and make this situation clear or did you make the change automatically without any direct discussion with you? Either way you or your wife need to contact them and explain the situation. Once they understand they will have to reduce the payment accordingly.

      Given your wife has already paid for 4 years I would say the last thing she should do is cancel the whole IVA and go bankrupt. In this situation I am sure you can resolve things direct with the company.

  19. Kelly


    I’ve been in my IVA for 6 months now, I can afford the repayments but having rushed into this I am now thinking that bankruptcy is a better option.

    I don’t own a house just a car that is probably worth £2k (which I use to take my daughter to school and for work) if I fail my IVA will I definitely be accepted for bankruptcy? I owed £37k please let me know my options, thanks Kelly

    1. 30.12.2019

      Hi Kelly

      If you are currently in an IVA but decide to go bankrupt your application will be accepted. You are not treated any differently because you started an IVA first…..

      Given you are not a home owner bankruptcy might work out a cheaper option for you. If you can afford monthly payments it is likely these will be a little lower if you are bankrupt. In addition they will last for just 3 years so at least 18 months less than your current IVA.

      The only thing you need to think about is your car. You are allowed a car but the rules state it cannot be worth more than £1000. I suggest you go onto we buy any and check to see if yours is truly worth £2k. You might find it is less. If it is £1500 or lower you can normally argue that you would be bargained down to £1000 anyway so no problem. However if it is worth more you would have to pay the difference to keep it.

  20. Sue

    If I stop paying my IVA and use that to save for the fee which would take 3 months, how soon would creditors come after me without the protection of the IVA?

    1. 21.11.2019

      Hi Sue

      If you stop paying your IVA company cannot officially terminate until you are 3 months in arrears. As such it will be a minimum of 3 months before your creditors are made aware that you no longer have your IVA. That said many IVA companies can take up to 6 months or more to get round to formally terminating the agreement.

      Therefore you have no need to worry. You will have plenty of time to save your up your bankruptcy fee without fear of getting hassle from your creditors.

      As a slight aside you do not have to wait for your old IVA company to issue you with your termination letter. You can submit your bankruptcy application any time as soon as you have saved the necessary fee. Once you are bankrupt the official receiver will communicate with your IVA company.

  21. Amanda

    Hi I have an Iva however I do not now think that it is for me I have been bankrupt before in 2006 but I was told that I could not go bankrupt again can you tell me if this is correct and if not how much dose it cost to make myself bankrupt and do I have to pay it all straight away

    1. 22.08.2019

      Hi Amanda

      What you have been told is not correct. You can certainly go bankrupt for a 2nd time if you wish. I have worked with a number of people who have done that. The fact that it is over 10 year ago since the last time you went bankrupt means you will not even have to mention it on your new application.

      The cost to make yourself bankrupt is now £680. You can pay this amount in instalments but you cannot submit your application until it is paid in full. The application process has changed as well since you last went bankrupt. It is now done on line.

  22. S Berry

    Hi, My husband and I are with Vanguard (via Faith Financial). When we started in Feb 18 the payments were £387 as I was on statutory maternity pay. I am now back at work and the payments have increased to £587.

    I am now pregnant with my 2nd child. I told Vanguard that the payments will need to be reduced and after filling in an income and expenditure form they have said they can reduce them to £569! I have asked where they are getting this from as I will be back on maternity pay and we were on £387 before and now will have 2 children to provide for but the payments remain much bigger than before.

    I am considering going bankrupt as myself and my husband do not own our own home, we privately rent and I own a £400 car and no other assets of any financial value. However my husband is a share holder in his Company, we looked at selling his shares but they are only worth £1 on paper, but we get a monthly income which helps us of £750 a month extra as dividends. He is worried that going bankrupt will affect the business – is this true? This would be our only set back to going bankrupt so any advice would be much appreciated.

    1. 21.08.2019


      The fact that your husband owns shares and receives regular dividends from these would be a problem if he went bankrupt. The Official Receiver (OR) would take over the interest in the shares (as they are one of his assets) and any future dividends would have to be paid to them. This could only be stopped if your husband subsequently bought back his interest in the shares. Calculating a fair price for this could be tricky.

      That said the way forward for you both will depend on how much of the total debt in the IVA you both owe. If you owe more than your husband then stopping the IVA might still be an option. You could go bankrupt to write off your share of the debt. This would not affect his shares or dividend payments. He could then repay his outstanding debt using a debt management plan.

  23. wayne

    I have been in my IVA just over a year. It has changed companies since I have had it. The 1st company pareto money were brilliant. This new company Jones davies are not very good at all. Now its down to them I’m not sure which way is best to go forward as I’m struggling to make the monthly payment on my wage.

    1. 20.08.2019

      Hi Wayne

      Given I know little about your circumstances it is hard to give you concrete advice. Whether or not it would be sensible for you to cancel your IVA and go bankrupt depends on a few things:

      1 – Your assets – If you are a home owner or own a car worth more than £1000 you will need to consider how bankruptcy would impact these things. If not then you probably have nothing to lose by going bankrupt.

      2 – Is it possible to reduce your monthly payments to make them more manageable? You should discuss this option with your IVA company. However if you cannot agree a sensible way forward with them cancelling the Arrangement might be sensible.

      Remember most of not all the money you have paid into the Arrangement during the last year will be lost. However if you then go bankrupt this will not matter as whatever your outstanding debts are they will be dealt with by the bankruptcy.

      If you would like further advice don’t hesitate to give us a call (0800 044 3194)

  24. Eric helmann

    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. 19.07.2019

      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.

  25. Tracy

    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. 11.07.2019

      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.

  26. Andy


    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. 19.06.2019

      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.

  27. Raid


    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. 18.06.2019

      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.

  28. Nicky

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

  29. Rachel

    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. 11.06.2019

      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.

  30. Sarah

    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. 11.06.2019

      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.

  31. Nicky

    Hi James

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

  32. Nicky

    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. 28.05.2019

      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).

  33. Katie

    Hi James

    Thanks for the advice, i don’t really want to sell so would make more sense to stay put, do you think it would be better for a friend to make an offer of a settlement I only have £4,000 left so have a friend offering to pay it off

    Kind regards

    1. 09.05.2019

      Hi Katie

      It might be possible to settle your IVA early using money from your friend. This will depend on how much you still have to pay into your IVA and the attitude of your IVA company. Why not speak to your IVA company about this and make the offer of £4k from a third party. See what they say. If you need further advice don’t hesitate to come back and ask.

  34. Katie

    Hi, I’m currently in an iva and wanting to go bankrupt instead as I’m thinking of selling my house and the Iva company are wanting to charge fees and I’ve added 4K onto my 8k if debt, is bankruptcy a better option and after the fee will the accept a settlement once my house sells?

    1. 30.04.2019

      Hi Katie

      You need to be a careful here. If you sell your house while you are in an IVA your share of any equity you release is classed as a windfall. This must then be paid into the IVA. The IVA would only be settled if the money paid in equals the total of your original debt (less any payments already made) + The IVA Company’s fees + interest at 8% per year from the start date of the IVA. If there is not sufficient money from the equity to do this then your IVA payments would have to continue.

      Given this it is not normally sensible to sell a property during an IVA unless there is zero equity in it.

      As you are a home owner stopping your IVA and going bankrupt would not help you. If you were to go bankrupt and then sell your house, again 100% of your share of any equity released would have to be paid into the bankruptcy. The Official Receiver would not accept a settlement. They would expect 100% of the debt to be repaid. In addition they would also add on their fees which are likely to be at least £10,000

  35. vince


    Currently in an IVA, currently coming to my 1st anniversary. I currently pay 300 for child maintenance. However the EX wife has contacted CMS and now i’m ordered to pay £448 a month. MY IP are sending me new income and expenditure form to complete.

    I’m worried my IVA will be extended a further year. I rushed into an IVA as was explained to me so wonderfully. I rent my house and have no assets worth over 1000. So in hindsight bankruptcy probably would of been my better option.

    Bankruptcy was discussed however i chose not to basically because it sounded worse to hear!. I’m very worried about letting my IVA fail and starting bankruptcy process. WOuld it be sensible for me to do this??


    1. 12.02.2019

      Hi Vince

      Your situation is actually pretty common. Your circumstances have changed during your IVA meaning you can no longer maintain the payments. Your IVA company may be able to reduce them but as you say that will come with a cost. If the reduction is agreed this will almost certainly go hand in hand with the Arrangement being extended for an additional 12 months.

      Given your circumstances bankruptcy is actually no worse than being in your IVA and will probably be a whole lot better for you.

      If you stop your IVA and go bankrupt you would not lose anything. Your landlord will not be told and as long as your car is not worth more than £1000 you will be able to keep it. Your credit rating will be effected in exactly the same way as an IVA (the record remains on your credit file for 6 years and then disappears). As such getting a mortgage in the future will be no more difficult.

      The clear advantage of bankruptcy for you is that it does not matter that your surplus income will fall. If your expenses are going up by £148/mth it stands to reason that your surplus must fall by the same amount. If this leaves you with no surplus you will not have to make any further payments towards your debts once bankrupt. If you still have a surplus the payments will only last 3 years compared to another 5 in your IVA.

      I recommend that you have a chat to your IVA company and see what deal can be struck regarding reducing your payments. However based on what you have said about your situation you could certainly decide to stop your IVA and go bankrupt and you would be much better off.

  36. Mark

    Hi. I have had an IVA for the past 6 months. Debt is 30K+. My wife and I will be moving abroad in March next year and I would like to apply for bankruptcy before moving. Is this a viable option? Is there a chance that they might refuse to make me bankrupt? Also, can I just ask my IP to fail my IVA without waiting for 3 months of no payments? Since we’re moving in March I’m afraid there won’t be enough time to apply for bankruptcy if I wait an extra 3 months. Thanks.

    1. 21.11.2018

      Hi Mark

      You can stop paying into your IVA and then go bankrupt at any time. As discussed above you simply stop your IVA payments and inform your IVA company that you want them to terminate the agreement. You can then apply to go bankrupt straight away. You do not have to wait for your IP to terminate the Arrangement. Given you qualify your application will not be refused.

  37. Debs

    I am currently on iva but need to apply for bankrupcy. I understand there is a fee for this?

    I have been diagnosed with arthritus in all my joints and currently only receiving ssp after having been signed off. I have no means of paying this fee. What can i do?

    1. 09.10.2018

      Hi Debs

      If your debt is less than £20k then rather than applying for bankruptcy you might qualify for a Debt Relief Order (DRO). This would give you the same outcome as bankruptcy but costs just £90 to implement. If your debt is greater than £20k or you do not qualify for a DRO for another reason then bankruptcy would be the next best option. There are various charitable trusts which might be able to help you pay the fee.

  38. Baz

    Hi, I currently have an IVA that I can afford to make payments. I have recently moved so my IVA company gave me a break on payment for 3 months. My living situation will be changing in 3 months and I now have to move again. The problem is my rent will be much higher in my new place as will be living alone – therefore I won’t be able to afford payments. Is this grounds to go bankrupt? I feel an IVA just doesn’t work for me, I have not kept up with payments on my IVA when I go over the threshold (when you have to pay 50% of overtime pay etc) so I know the debt will just be extended even further than the 5 years. I rushed into an IVA as felt bankruptcy would effect me more at the time but now feel it was the better option.

    Any advise would be great, thank you

    1. 26.09.2018

      Hi Baz

      If you are renting and your car is worth £1000 or less then generally speaking there is no advantage to you being in an IVA compared to Bankruptcy. As such if your expenses have now increased and you are going to find it more difficult to continue paying your IVA failing the Arrangement and going bankrupt is a sensible option to consider.

      Remember if you go bankrupt you will have to give information about your new income and living expenses budget. If based on the changes you have some disposable income you will still have to pay this towards your debts. However the payments will only last 3 years. If you have no surplus income you will not have to make any further payments.

  39. Chris

    I’m currently in an IVA, 1 year out of 5. I can quite easily afford my repayments right now, but this is because of my self-employed job role; where I haven’t collected for Tax Return as of yet. I feel when I do my self-assessment my tax bill will be high and the IVA unhappy that my income is potentially higher than originally thought.

    I would like to go bankrupt to cancel the IVA and clear the Debt I owe; so I can continue working and build a better credit file to eventually purchase property. Can I do this, or will I be faulted for not accurately disclosing income (which is impossible to forecast earnings on self employment accurately.)

    1. 03.09.2018

      Hi Chris

      From what you have said I understand that you can afford your IVA payments but only because you are not putting anything aside to pay your tax bill. Is this correct? If so then your IVA is not set up correctly. Your monthly IVA payment should be calculated after you have correctly provisioned for tax. If this is not happening then at the end of the year you will have a new debt in the form of a tax bill. If this is large it is unlikely you will be able to add it to your IVA and the whole arrangement is likely to fail.

      If this is the case and you are expecting a tax bill then allowing your IVA to fail and then going bankrupt might be a sensible solution for you. You are certainly allowed to do this and the new tax bill would be included in your bankruptcy.

      However be advised that bankruptcy will also have a negative affect on your credit file. Just like with an IVA the record of bankruptcy remains on your credit file for 6 years and will make getting credit difficult during this time. It means you are unlikely to be able to get a mortgage to buy a house for at least 6 years from the date of your bankruptcy.

      In addition you will be asked to give details of your income and living expenses. If you have surplus income then this will have to be paid towards your debt for 3 years. As such it will be critical to get your figures right. Given you are self employed you need to base your income on your average drawings after provision for tax. I recommend that you base your average over the last 6-12 months depending on your business. If you need more advice on this please contact us.

  40. Susan

    I am already in a IVA but even though I been in it for approximately 2yrs or more I am extremely unhappy with the service from the company I am with. Therefore I am wondering if I can go Bankrupt instead.

    In addition my only income is ESA and DLA so I will struggle to pay the bankruptcy fee. Is there anywhere I could get financial help to pay it?

    1. 03.07.2018

      Hi Susan

      If you are unhappy with your IVA there is nothing to stop you cancelling it and then going bankrupt. As highlighted in the article above you would need to stop your IVA payments and tell your IVA company that you want them to cancel the arrangement.

      As you mention if you want to apply for bankruptcy the problem that you (and many others face) is finding the money to pay the bankruptcy fee. Unfortunately there is no reduction in the fee if you are on benefits or a low income.

      One option for getting the fee together is to save the money you need. Bear in mind that you will not be paying your IVA so you could put this money towards the fee instead. Your creditors will not start chasing you normally for 3-6 months after your IVA is terminated so this should give you the time you need.

      In terms of getting financial help there are some utility companies and other organisations who do offer grants to fund bankruptcy in certain circumstances. You could also investigate these options.

  41. Tammie


    If I was to let my iva fail with the intention of going bankrupt would the IP inform me of my outstanding debts to my creditors for filling in the bankruptcy application?

    Also in the 3 months waiting for my iva to fail would I be likely contacted by my creditors. I am two years in to my iva and for the last 12 months I keep reading online and thinking it was a poor choice against bankruptcy

    1. 23.05.2018

      Hi Tammy

      If your IVA fails you will get a letter from your IP confirming that it has been terminated. However they will not necessarily tell you what the outstanding debts to your creditors are. As highlighted in the article above it is possible that a considerable amount of the money you have paid into the arrangement will be taken in fees. As such the balances may not have gone down that much.

      Given this my advice is always to simply list the same balances in your bankruptcy application form as when you started your IVA. It is not actually a requirement to list 100% accurate balances when you complete the form. An estimate is perfectly acceptable. Whether the amounts you put down are under or over will make no difference to the outcome of the bankruptcy.

      In regard to your creditors contacting you while you are waiting for your IVA to fail you do not have to worry. They are not actually told that your IVA has failed until you get your terminantion letter. In fact even after you get this it is unlikely they would contact you for another 3 months as it takes some time for them to update their systems. Given this you have plenty of time to save up for the bankruptcy fee.

  42. Michelle

    I am currently in a iva for another 2 years I am struggling with the payments. I would like some advise on what I would loose etc if I declared myself bankrupt

    1. 20.02.2018

      Hi Michelle,

      What you might lose if you allow your IVA to fail and then go bankrupt depends very much on your personal circumstances. You need to consider 3 arears:

      First of all are you a home owner? If so then your property might be at risk. However if you live in rented accommodation this will not be affected at all as long as you maintain your rent payments.

      Secondly do you own a car? If so and it is worth more than £1000 you might have to sell it and get a cheaper one. If it is worth less than £1000 it is exempt from bankruptcy and you can keep it as long as you need it.

      Thirdly your personal possessions. Generally you will be able to keep all of your household belongings including your clothing, furniture and electrical goods including your laptop ipad and mobile phone. The only time any of your belongings might be at risk is if an individual item is worth more than £500 on the second hand market.

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James Falla
I have been advising people on how to solve their debt problems for over 20 years. During this time I have helped many people go bankrupt. I am an FCA Approved Person and the Managing Director of Wilmott Turner Financial Services (owner and operator of Bankruptcy Expert
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