A surprisingly large number of IVA’s do fail before completion. Sometimes this is the fault of the debtor. They failed to disclose vital information about increased income or significant changes, or maybe somehow managed to take out further credit without the permission of the Insolvency Practitioner, it is quite possible for the debtor to be in breach of the rules surrounding the IVA and the plan fails. The IVA is terminated and creditors informed. We are back to square 1 and if the failure has happened early on in the life of the IVA then it’s possible that little or none of the payments have reduced the debt, as part of the Insolvency Practitioners’ fees are met first.

Then again it may well be circumstances beyond our control that have led to the failure. We can’t pay what we haven’t got and if our income reduces or our outgoings increase, then the IVA payment may no longer be possible. It’s always right to inform the IVA supervisor as soon as this happens. Missed payments with no explanation will quickly lead to failure. But in revealing the problem to our supervisor, it may be that a solution can be found. Payment holidays are possible, sometimes for a number of months. If we lose our job, IVA payments can be suspended whilst a new job is sought, and the debtor is still legally protected within the IVA. But there may come a time when the IVA simply cannot be put on hold any longer. Perhaps bankruptcy (or a Debt Relief Order) has become the only option and the right option given our changing circumstances. For some the IVA ends, and debtors simply make token payments to their creditors in an attempt to keep the debt under control for a while. Following a breach of the IVA, it is possible to re-apply for an IVA again if circumstances change in our favour again, but it would be a case of starting the IVA from the beginning again. 

The vital thing is to keep communication open with your IVA Company. They need to know as soon as changes occur or problems emerge.