Can I finish my IVA early?
Yes, you can finish your IVA early if the opportunity arises.
In fact, even though the normal duration of an Individual Voluntary Arrangement (IVA) is 5 years, there is no restriction on the minimum length of an IVA.
The length of your IVA will be dependent on your personal circumstances and as a result, if your personal circumstances change, so might the term of your IVA.
Finishing An IVA Early
There are, obviously, a multitude of different reasons why someone might want to finish their IVA early, but most will be as a result of changes to their personal circumstances.
The most common way to finish an IVA early would be to make an offer of an early settlement to your creditors and this is not as unusual as you may think.
Here are a few of the more common occurrences.
Full and Final settlements
Often, a 3rd party can introduce a lump sum as a 'Full and Final' settlement.
Creditors like this type of early completion because it saves them from having to wait the full term of the IVA to get their money back, so this option is usually well received.
It can be difficult to ascertain how much money you will need to offer to creditors because it will very much depend on where the funds are coming from.
As a guide, take a look at this page which discusses the settlement calculation.
Equity settlements
An opportunity to offer an early settlement may arise through the voluntary sale of a house containing equity.
For instance, where relocation for a job requires you to move to a new area. Some of the released equity from your property might be enough to bring your IVA to an early finish, whilst still leaving you with enough funds to help with resettlement.
Alternatively, selling an investment property might also be a perfect way to bring your IVA to an early completion.
Windfall clause
Another opportunities to pay off an IVA early might arrive through a financial windfall.
Being the beneficiary in a will, or winning a large sum of money will both invoke the windfall clause, which obliges you to declare the funds to your IP.
If the windfall is sufficiently large to enable you to settle your original debts in full, you will be obligated to do so, and your IVA will come to a successful conclusion.
IVA failure
If you are no longer able to afford your IVA contributions you should consult with your IP at the first opportunity.
Your IP has the discretion to offer upto 9 payment breaks, which might help your IVA to stay on track, but sometimes, missing a few payments won't be enough.
When circumstances have taken a change for the worse, and there's no likelihood of a recovery, then it may be necessary to allow your IVA to fail.
Your IVA will first fall in to breach after you've miss 3 consecutive payments.
If you have made it clear to your IP that you want your IVA to fail, they will terminate your IVA for you.
Once your IVA has failed, your IP will then notify your creditors, who are once more free to pursue you for the original debts that were included in the IVA.
If you have suffered a large adverse change to your circumstances, a Debt Relief Order or bankruptcy might, at this stage, offer you the best route out of debt.
