Can I finish my IVA early?
Yes, you can finish your IVA early if the opportunity arises.
In fact, even though the normal duration of an Individual Voluntary Arrangement (IVA) is 5 years, there is no restriction on the minimum length of an IVA.
The length of your IVA will be dependent on your personal circumstances and as a result, if your personal circumstances change, so might the term of your IVA.
Finishing An IVA Early
There are, obviously, a multitude of different reasons why someone might want to finish their IVA early as a result of changes to their personal circumstances.
The most common way to finish an IVA early would be to make an offer of an early settlement to your creditors and this is not as unusual as you may think.
Here are a few of the more common occurrences.
Full and Final settlements
Often, a 3rd party can introduce a lump sum as a 'Full and Final' settlement.
Creditors like this type of early finish because it saves them from having to wait the full term of the IVA to get their money back, so this option is usually well received.
It can be difficult to ascertain how much money you should offer to creditors, as too little will probably be rejected and too much would be wasteful.
Take a look at this page which discusses the settlement calculation.
An opportunity to offer an early settlement may arise through the voluntary sale of a house containing equity.
For instance, where relocation for a job requires you to move to a new area, some of the released equity from your property might be enough to bring your IVA to an early finish, whilst still leaving you with some funds to resettle.
But it doesn't need to be as a result of a resettlement. If you have an investment property which you are prepared to sell, which has equity within its value, it might be a perfect way to draw the IVA to an early finish.
Another opportunity to pay off an IVA early might arrive through a financial windfall. Being the beneficiary in a will, or winning a sum of money will invoke the windfall clause, which obliges you to declare the funds to your IP.
If the windfall is large enough, it may be sufficient to repay the original debt, bringing the IVA to an immediate conclusion.
If you are no longer able to afford your IVA contributions you should consult with your IP at the first opportunity.
Your IP has the discretion to offer a temporary payment break, but sometimes that won't be enough.
When circumstances have taken a change for the worse and look set to remain so, then it may be necessary to terminate the IVA by stopping contributions to it.
Your IP will terminate the IVA after 3 consecutive missed payments and they'll then notify your creditors that the IVA has failed.
Once the IVA has been terminated the creditors are free to pursue you again for the original debts included in the IVA and they regain their right to take legal action against you for recovery.
The options available to you at this time will be exactly as they were before the IVA began, but assuming you have suffered a substantial loss in income or increase in your living costs which made the IVA payments unaffordable, the chances are your best option would be to explore the bankruptcy option.