If things go wrong

If you are struggling to keep up with payments

If your circumstances change and you find it difficult to make your IVA payments, the most important step is to contact your Insolvency Practitioner as soon as possible — ideally before you miss a payment.

Common reasons for struggling include:

• Losing your job or being made redundant
• A reduction in income or working hours
• Illness or disability
• Relationship breakdown affecting household income
• Unexpected but essential expenditure (home repairs, medical costs)
• Maternity or paternity leave

Your IP may be able to grant a short payment break, temporarily reduce your payments, or propose a formal variation to the arrangement. None of these are automatic — but your IP cannot help if they do not know you are struggling.

Requesting a variation

A variation is a formal change to the terms of your IVA requiring creditor approval (75% by value of those who vote must agree). Your IP will prepare a variation proposal and put it to creditors on your behalf. Common variations include:

• Reducing your monthly payment amount
• Extending the length of the IVA
• Changing the equity release provisions
• Converting missed payments into an extension

Not all variation proposals are approved. Creditors will consider whether the proposed change is reasonable. If a variation is rejected, you will need to discuss alternatives with your IP.

Breach of your IVA terms

A breach occurs when you fail to comply with the terms of your IVA without a valid reason. Common breaches include:

• Missing payments without contacting your IP
• Failing to disclose a change in circumstances or a windfall
• Taking on new credit above the permitted threshold without consent
• Not cooperating with annual reviews or requests for information

When a breach is identified, your IP will usually write to you formally, setting out the breach and giving you an opportunity to remedy it within a specified period. If you address the breach in time, the IVA typically continues. If not, your IP may issue a formal notice of breach to creditors and consider failing the arrangement.

IVA failure

If your IVA fails, the arrangement is terminated before you have completed your obligations. Failure may occur if:

• You persistently miss payments and do not engage with your IP
• A variation is proposed but rejected by creditors and no other solution is found
• You commit a serious breach that cannot be remedied
• Your IP concludes the arrangement is no longer viable

Consequences of IVA failure

When an IVA fails, the legal protection it provided — preventing creditors from taking enforcement action — ends immediately. Possible consequences include:

• Creditors may resume collection activity, including court action (county court judgments)
• A creditor or your IP may petition for your bankruptcy
• Your credit file will record both the IVA and its failure
• Any assets that would have been protected within the IVA may now be at risk

The original debts are not cancelled on failure. Creditors can pursue you for the full outstanding balance, minus any payments already distributed during the IVA.

Your options after an IVA fails

If your IVA has failed or is at serious risk of failing, you should seek free, independent debt advice promptly. Options to consider include:

• Negotiating directly with creditors if your situation is temporary and you can resume payments
• A new IVA — this is possible in some circumstances, though not guaranteed
• Bankruptcy — provides a fresh start but has more significant asset implications
• A Debt Relief Order (DRO) — available if debts are under £30,000 and you have minimal assets and low income
• A Debt Management Plan (DMP) — an informal arrangement not involving insolvency