Savings and Your IVA, Question by Question
What you keep, what goes in, and why honesty matters.
What happens to my savings during an IVA?
Any significant savings are usually expected to go towards your debts. The logic of an IVA is that you pay what you can before debts are written off, so holding a lump sum while creditors are only partly repaid is not normally allowed. Existing savings at the start of an IVA are generally treated as an asset that should be contributed for the benefit of your creditors.
Can I keep any savings at all?
A modest amount, often yes. While large savings are expected to go in, building up a small emergency fund from your allowed budget, for genuine unexpected costs, is frequently tolerated in practice. What is not accepted is keeping a substantial sum aside while writing off debt. If in doubt about a particular amount, your supervisor can tell you what is reasonable.
What about money I save from my budget?
Small, sensible saving is usually fine. Your IVA budget is meant to cover a reasonable standard of living, and if you manage to set aside a little for emergencies from within it, that is generally seen as prudent rather than a problem. The concern is larger sums or savings that suggest your budget, and therefore your payment, should be revisited.
What if I receive a windfall?
Windfalls usually have to be paid in. Money that arrives unexpectedly during your IVA, an inheritance, a bonus, a redundancy payment, a lottery or compensation win, is normally treated as belonging to the arrangement and goes towards your debts. If large enough, a windfall can even settle the IVA early. You must declare windfalls rather than keeping them quiet.
Are my pensions safe?
Generally, yes. Money held in an approved pension scheme is usually protected in an IVA and not treated as available savings. The main caution is around pension money you actually draw during the arrangement, a lump sum you take out could be treated like other income or a windfall. If you are near pension age, it is worth getting advice before drawing anything.
Do I have to declare my savings?
Yes, fully and honestly. When you set up an IVA you must disclose your assets, including savings, and you should report new savings or windfalls during it. Concealing money is a serious matter that can breach the arrangement and undo it. Being open is always the right approach, and your supervisor can then tell you what, if anything, needs to be contributed.
Should I clear my savings before starting an IVA?
Not without advice. It can be tempting to spend or move savings before an IVA, but doing so to put them out of reach of creditors can cause serious problems and may be challenged. The right approach is to be open about what you have and let an adviser guide how it should be treated. Never try to hide or dispose of savings to game the process.
Should I get advice?
Yes, particularly if you have savings or expect a windfall. How savings, pensions and windfalls are treated can significantly affect whether an IVA is right for you. A free, impartial adviser can explain the rules clearly and help you decide. It costs nothing, and getting it right from the start avoids problems later in the arrangement.
