IVA Cancellation: Can You Legally Get Out?

Are you struggling with debt and wondering if there’s a way out of your Individual Voluntary Arrangement (IVA)? You’re not alone. Many people find themselves in this situation, seeking clarity on whether it’s legally possible to cancel their IVA. 

Don’t worry. In this article, we’ll break down the facts without the jargon, giving you the straightforward information you need to navigate your financial journey. Whether you’re currently in an IVA and wish to cancel or just curious about your options, keep reading to learn more.

So, without further waiting, let’s get started…

Exploring the Legal Grounds for IVA Cancellation

It’s crucial to approach this decision with caution and seek advice from your insolvency practitioner beforehand. Before taking any steps, you need to make sure you’re fully informed about your options and the potential consequences. 

Remember, cancelling your IVA should only be considered if your financial circumstances are expected to change significantly and you’re confident you can repay your debt soon. Thus, take the time to discuss your situation thoroughly with your Insolvency Practitioner and explore alternative solutions. 

Making an informed decision now can lead to better financial outcomes in the long run.

Termination of IVA 

When it comes to terminating an Individual Voluntary Arrangement (IVA), it’s essential to understand the consequences before taking any action. Typically, an IVA is terminated if you stop making repayments to your lenders. 

However, this decision doesn’t erase your debt; it remains outstanding. 

Additionally, you may be liable to pay fees to your practitioner for their services up to that point, including potential cancellation fees. Upon termination, you’ll still be responsible for repaying your debts, along with any accrued interest, including statutory interest. 

Importantly, terminating an IVA can have a lasting impact on your credit score, as all debts will still be reflected. Therefore, it’s crucial to weigh the implications carefully and seek advice from your insolvency practitioner to explore alternative solutions before making any decisions.

Why Would You Want to Cancel Your IVA?

You might consider cancelling your IVA for several reasons, which can drastically alter your approach to handling debt:

• Significant Change in Financial Circumstances: Perhaps you’ve received a substantial pay increase, or your expenses have dramatically decreased.
• Unexpected Financial Windfall: Receiving an inheritance or large financial gift might provide the funds to pay off your debts sooner than expected.
• Health Issues: Severe health problems could alter your ability to make regular payments, necessitating a reevaluation of your financial arrangements.

Each of these reasons can provide a valid ground for IVA cancellation, but they also bring new considerations for your financial recovery and future planning.

How to Cancel an IVA: A Step-by-Step Guide

Cancelling an IVA requires careful thought and strategic planning. Here’s a clear guide to navigating this complex process:

1. Evaluate Your Situation: Assess whether your change in circumstances justifies the cancellation of the IVA. This decision should not be taken lightly.
2. Consult Your IP: Discuss your situation with your insolvency practitioner, who can provide crucial advice and outline the potential outcomes of cancellation.
3. Prepare Your Case: Gather all necessary documentation that supports your reason for cancellation. This preparation is key to convincing your creditors.
4. Negotiate with Creditors: Through your IP, enter into negotiations with your creditors to seek their approval. This step is often the most challenging part of the process.
5. Formalise the Cancellation: If your creditors agree, your IP will help you complete all necessary legal paperwork to officially cancel the IVA.

Each step requires attention to detail and careful handling to ensure that the cancellation process is legally compliant and financially sound.

What might happen if your creditors agree? What if they don’t? The answers to these questions could significantly impact your financial future, and we’ll explore these scenarios next. Stay tuned to learn more about navigating the complex process of an IVA cancellation.

IP and Creditors Agreement: Is Cancelling IVA the Right Decision For You?

It’s a question that many people grapple with, and getting advice from someone who knows your financial situation well is key. Your insolvency practitioner is the go-to person for this. They can give you personalised advice based on your circumstances, helping you make the best decision for your situation. 

And don’t worry about your privacy – they’re bound by strict rules to keep your information confidential. It simply means they are not allowed to disclose your case to anybody unless it’s you.

While cancelling your IVA is primarily a financial decision, it’s also essential to consider how it might affect your mental well-being. Dealing with debt can be stressful, so taking the time to weigh your options carefully is crucial.

Effective negotiation requires patience and persistence. Remember, the goal is to reach a conclusion that respects all parties’ interests.

Stop Making Payments: What Are the Consequences?

Ceasing payments without proper legal and financial advice can lead to severe consequences. If you abruptly stop making payments on your IVA, here’s what could potentially happen:

• Legal Actions: Your creditors may pursue legal action against you, which could result in court orders, such as County Court Judgment (CCJ), for debt repayment or asset seizure.
• Credit Impact: Stopping payments can severely impact your credit score, making it difficult to secure loans or credit in the future.
• Increased Stress: The threat of legal action and a worsening financial situation can lead to significant personal stress and anxiety.

Understanding these consequences is crucial. If you are considering stopping payments as a way to end your IVA, think again. Could there be a less risky option?

Is Cancelling IVA the Right Decision For You?

Deciding to cancel an IVA is significant and should not be taken lightly. Consider the following before making your decision:

• Financial Stability: Assess your current financial stability. Are you in a position to manage your debts without the IVA?
• Future Income: Consider your future income prospects. Are there changes on the horizon that could improve your ability to repay your debts?
• Credit Score Impact: Understand the potential impacts on your credit score. Cancelling an IVA can affect your credit, sometimes negatively.

This decision involves weighing the benefits against the risks. Are the potential benefits worth the possible financial and personal consequences?

What If the Creditors and IP Don’t Accept the Proposition?

If your creditors and insolvency practitioner (IP) don’t agree to the proposal, you can’t carry on with your current agreement for the agreed duration. The only option for cancelling an IVA is if all your creditors agree to it.

Seek Free Financial Advice 

Sometimes, you may find hardship in dealing with debt issues alone. In those situations, there are a number of debt charity organisations that you could use to get professional debt and financial advice free of charge. Their advisors will inquire deeply about your debt issue and will help you in finding a reliable solution to overcome it.

Below is a list of charity debt organisations where you could get free debt help:

1. StepChange
2. National Debtline
3. Citizens Advice
4. Debt Advice Foundation

Final Thoughts: 

Deciding to cancel an Individual Voluntary Arrangement (IVA) is a big step that needs careful thought. It might seem like a good idea if your financial situation has changed a lot or if you’ve got unexpected money or health problems. But it’s important to be cautious. 

If you cancel your IVA, it can have serious consequences like legal actions from creditors, a bad impact on your credit score, and more stress. That’s why talking to a debt advisor before making any decisions is really important. 

Before finalising your decision, you need to consider your current and future money situation and how cancelling your IVA might affect your credit. If your creditors and advisor disagree with cancelling, your assigned insolvency practitioner or free services like StepChange or National Debtline can help you figure out your options.