If Your IVA Fails, Question by Question
What failure means, and how to avoid it where you can.
What happens if my IVA fails?
Your protection ends and creditors can pursue you again. If your IVA fails, your supervisor issues a termination certificate, and the legal protection the IVA gave you falls away. Your creditors are once more owed the remaining balance of your original debts, can resume contact and collection, and may add back the interest and charges that had been frozen. In short, you are largely back where you started, minus what you have paid in.
Why do IVAs fail?
Usually because payments cannot be kept up. The most common cause of failure is missed payments, often triggered by a drop in income, job loss, illness or rising costs. An IVA can also fail if you breach other terms, such as not declaring a windfall. Importantly, many of these situations can be managed if you act early, failure is frequently the result of problems going unaddressed.
Do I get back the money I've paid in?
No, payments already made are not refunded. The money you have paid into a failed IVA has gone towards your creditors and the arrangement's fees, and you do not get it back. This is one of the hardest aspects of failure, and a key reason to do everything possible to keep an IVA on track or to exit it in a planned way rather than letting it collapse.
Will interest and charges come back?
They can. While your IVA was active, interest and charges on the included debts were frozen. If it fails, creditors are generally free to add that interest back on and to apply new charges, so the amount you owe can climb again. The reduction you were working towards is lost, which is why preventing failure matters so much.
Could I be made bankrupt?
It becomes a real possibility. After a failed IVA, your creditors, or sometimes your supervisor, can apply to make you bankrupt, especially if there is no other way to repay what you owe. Bankruptcy is not automatic, and you can act to avoid it, but the risk is real. Getting advice quickly after a failure is the best way to head it off.
What are my options if it fails?
There are still several routes. After a failed IVA you might negotiate a new repayment plan directly with creditors, set up a debt management plan, apply for a debt relief order if you qualify, or, in some cases, consider bankruptcy as a fresh start. The right option depends on your circumstances. Free debt advice can help you choose, and you are not on your own.
Can I stop my IVA from failing?
Often, yes, if you act early. If you are struggling, the worst thing to do is stay silent and miss payments. Speak to your supervisor as soon as possible. Under the current rules they can reduce your payments by up to 20% without even asking creditors, and larger reductions, payment breaks or cost-of-living support can often be arranged. Many IVAs that could have failed are saved this way.
What happens to my credit file?
The IVA stays, marked as failed. A failed IVA does not disappear from your credit file, it remains for six years from the start date, recorded as failed rather than completed. You are also removed from the Individual Insolvency Register about three months after failure. So failure does not clear the record early; it simply changes how the IVA is marked.
Should I get advice?
Yes, urgently if failure is looming or has happened. A free, impartial adviser can help you avoid failure where possible, or, if your IVA has already failed, work out the best way forward and help you avoid bankruptcy if you can. Acting quickly gives you the most options. It costs nothing, and getting support early can make a real difference to the outcome.
