Cancelling, Question by Question
What it really means to end an IVA early, and the safer steps to take first.
Can I cancel my IVA?
Yes, you can cancel an IVA once it has started, but it is a serious decision with lasting consequences. It is not like cancelling a subscription, ending the arrangement early undoes the protection it gave you and can leave you worse off than before. For most people in difficulty there are better options than cancelling, which is why it is worth getting advice first.
What happens to my debts if I cancel?
They come back, and often bigger. When an IVA is cancelled, the debts it covered become payable again in full, and any interest and charges that were frozen during the arrangement can be added back on. So you could end up owing more than the balance you had left, having already made payments towards it. This is one of the biggest risks of cancelling.
Do I get my payments back?
No. The payments you have already made into the IVA are not refunded if you cancel. They will have gone towards your creditors and the practitioner's fees, and you cannot reclaim them. This means cancelling part way through can feel like the worst of both worlds: you have paid in, but the debts are still there.
Can my creditors chase me again?
Yes. The legal protection an IVA gives you ends when it is cancelled. From that point your creditors are free to contact you, add interest, and take recovery action again, including court action. Part of the value of an IVA is holding creditors back, so cancelling removes that shield as well as the write-off you were working towards.
Could I be made bankrupt if I cancel?
It is a real possibility. When an IVA fails, the terms often allow your supervisor to petition for your bankruptcy, and individual creditors can do the same, particularly if you owe a large amount or owe money to HMRC. Bankruptcy is not automatic, but it is a genuine risk, which is another reason to seek advice before letting an IVA end.
How does an IVA actually get cancelled?
Usually through a breach. If you stop paying or break the terms, your supervisor must issue a 'Notice of Breach', giving you around a month to put things right. If the breach is not remedied, they issue a 'Notice of Termination' and then a certificate of termination, which formally ends the IVA. You can also ask your supervisor to terminate it, but the same consequences follow.
I can't afford my payments, do I have to cancel?
Not usually. If your income has dropped or your costs have risen, the answer is rarely to cancel. Your supervisor can often agree a 'variation', reducing your payments, and may be able to grant a short payment break without even going back to your creditors. Tell them as soon as money gets tight, because a struggling IVA can often be saved if you act early.
What are the alternatives to cancelling?
There are several worth exploring first. A variation can lower your payments or pause them; more communication can clear up a dispute; and if your situation has changed permanently, a free adviser can compare your options. Only if an IVA genuinely is no longer the right solution should you consider ending it, and even then a route like a Debt Relief Order or bankruptcy should be weighed up with advice.
What should I do if I'm thinking of cancelling?
Talk to your supervisor and a free adviser before you do anything, and do not simply stop paying. A free service like StepChange, MoneyHelper or Citizens Advice can explain exactly what cancelling would mean for you and whether a variation would fix the problem instead. Be wary, too, of any firm that offers to get you out of your IVA early for a fee, as some of these are scams.
