We consider what will happen if you cannot pay your IVA and ways to avoid IVA failure. Individual voluntary arrangements (IVA) can be used to great advantage when dealing with a personal debt problem. By getting IVA advice and carrying out an IVA it is likely that you will write off thousands of pounds of your unsecured debts. However you should not start an IVA without first getting IVA help from an expert debt advisor and being clear that you are able to afford the required monthly payments. If you start an IVA and you name is added to the IVA register but you then fail to complete the payments, there could be very serious consequences. IVA failure Your IVA is at risk of failing of you are unable to make the monthly payments that you have agreed for any reason. If you stop making your payments because you cannot afford to pay them then it is possible that your insolvency practitioner (IP) will fail your IVA. If your IVA fails at the very least it is likely that you will be left still owing the majority of your original debt. Your IP has two options. They can simply update the IVA register confirming your IVA has failed and then leave you to deal with your creditors yourself once again. Alternatively your IP may force you to go bankrupt especially if you are a homer with equity in your property. If you are worried that you can no longer afford your IVA payments you must therefore get IVA help from your IP as soon as possible. Taking a payment holiday If you are unable to continue making your agreed payments this does not mean that your IVA will simply fail. If you feel that you are in this position you must get IVA help from your IVA company or the insolvency practitioner personally responsible for supervising your IVA. After getting IVA advice from your insolvency practitioner, one of the common options which they will suggest is taking a payment holiday. The payment holiday could last up to six months which may give you enough time to reorganise your finances or seek alternative employment if you lost your job. You could therefore avoid IVA failure. IVA variation If your income has permanently reduced or your living expenses have increased your insolvency practitioner could ask your creditors for an IVA variation to reduce your monthly payments. A variation will mean that you pay less into your IVA each month than was originally agreed without the risk of it failing. However to compensate your creditors you may also have to agree to extend the number of IVA payments that you make. When you get IVA advice from your IVA company you must make sure you understand whether a variation will have any of these consequences. Proper IVA advice Of course no one can be 100 percent sure what will happen to their finances over the next five years. But because the failure of an IVA could result in such serious consequences, you must not start this type of debt management solution unless you are confident that you will be able to maintain your agreed payments from the beginning. Because of the advantages that individual voluntary arrangements may bring, it is sometimes tempting to agree to the terms of an IVA out of desperation. But it is never a good idea to start an IVA if you are worried that you cannot afford to pay what you have agreed. Before starting an IVA it is therefore vital that to get the proper IVA advice and that your monthly payments are set correctly. Getting the right IVA help from the beginning will ensure that you become one of the thousands of people who successfully complete IVAs every month.
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