Failed IVA

There's always the possibility that an IVA might fail at some stage during the process for any of a number of reasons and the consequences of a failed IVA might be very difficult to deal with.

Understanding the choices you have at this time will be very important if you're to minimise the impact of a failed IVA, so what happens when an IVA fails and what options do you have?

What Is A Failed IVA?

When we talk of a failed IVA we're normally referring to an IVA that fails to make it to the end of the agreed term as set out in the proposal

All IVAs are based on the personal circumstances of the applicant and if these circumstances change, the basis on which the IVA has be formed will change too.

If these changes are substantial enough and for the worse, the IVA will be vulnerable to failure.

Failed IVA Creditors' Meetings

Failed IVA creditor meetings do happen from time to time and, where no agreement is reached between the parties, it's inevitable the Creditors' Meeting will fail.

In most cases the insolvency practitioner would simply adjourn the Creditors' Meeting prior to the IVA being failed, because adjourning the meeting creates a 14 day period during which negotiations can take place.

Many Creditors' Meetings that get adjourned will end successfully in agreement but, inevitably, there's a few that wont.

Re-proposing an IVA

When an IVA Creditors' Meeting has failed, it doesn't mean that's the end of the IVA route for the applicant. Indeed, many failed IVAs can be re-proposed almost immediately.

The suitability of re-proposing the IVA will be determined by first establishing why the original IVA failed to meet the creditors requirements.

It may be a simple case of making amendments to the first proposal and rectifying any issues. Once this has been done there's every chance creditors will agree to a re-proposed IVA.

But simply representing the same proposal without any modifications would be ill-advised.

Important Note: The re-proposed IVA doesn't need to prepared by the same IVA nominee. If you feel your chances would be improved by changing to another IP at this stage you are free to do so. are experts at representing previously failed IVA's - If you think we can help you why not call our helpline on 0800 088 7502 to discuss your options with an adviser.

Failure during the IVA

Most failed IVAs happen as a result of a significant and detrimental change to the applicant's circumstances.

Since the introduction of the IVA protocol in February 2008, options are available to assist with temporary changes in circumstances, such as payment breaks and payment reductions.

And it's also possible to approach creditors to propose a permanent variation to the IVA, if the payment break or reduction isn't enough to keep the IVA on track.

But when payments into the IVA cease and all avenues have been explored with no resolution being found, the IVA will fail.

What happens after the IVA fails

As soon as the IVA has failed the IP will issue a notice of failure, stating that the IVA has been terminated.

At this point the IVA no longer exists, all protection that the IVA provided is withdrawn and creditors are now free to pursue the debts as they were before.

Furthermore, the debtor once again becomes liable for the outstanding balances on the original debts.

What will the IP do?

What happens next will be determined by a few different factors.

In some cases, the IP will have specific instructions from the creditors as to what action they are required to take should the IVA fail. In extreme cases this can include the request to petition for bankruptcy.

More commonly, however, there will be no instruction to the IP and what happens next will be determined by the IVA candidate.

What Next?

Once the IVA fails, the IVA candidate is back to the position they were in prior to taking out the IVA. But they're now liable once again for the outstanding debt that was contained by the IVA, so they'll need to find a new solution to deal with their financial obligations.

They'll have a few choices, the suitability of each being dependent on the cause of the failure of the IVA in the first place.

Enter another IVA?

It is possible that another IVA is a viable option.

Many people whose first IVAs end in failure will successfully complete a second IVA, but the viability of this option would need to be explored thoroughly before a second commitment was made.

If you want to try a fresh approach and try a new IVA agreement, you should call 0800 088 7502 as soon as possible.

We've an impressive track record of helping people with a failed IVA get back on the road to financial recovery through entering an second IVA.

Once we've established the IVA remains a viable option, albeit in another guise, more often than not, we're able to engage creditors and get their backing.

Creditors will always be interested in an IVA when it can be demonstrated that bankruptcy offers a lower financial return.

Debt Management Plan?

It may be another IVA is out of the question, possibly due to affordability.

If this is the case the remaining options are as they were prior to entering the original IVA, including entering into a Debt Management Plan.

A Debt Management Plan would be preferable to those people to whom bankruptcy is not an option, such as people with incomes or assets that need protecting.

Whilst a Debt Management Plan will require all the original debt to be repaid over a longer repayment term, it will at least offer a chance of avoiding bankruptcy.


It may be that, due to the change in circumstances that's been experienced, the best available option is bankruptcy.

In fact, for people whose circumstances have taken a severe change for the worse, bankruptcy will be only logical option.

Whilst it will be, no doubt, disappointing to have tried and failed an IVA, the reality will be that bankruptcy offers a quicker and cheaper way to debt freedom.

Professional Advice

If you've recently failed an IVA and you're exploring your options, why not give us a call.

Our IVA advisers will be able to answer all your questions and help you establish which is the most suitable way forward.

Simply call our helpline on 0800 088 7502 or complete tis form and one of our advisers will call you back at your preferred time.

Request Help

Key Information
  • We only use your personal data for the purpose for which you provided it.
  • We only share select data with external parties where it is necessary in relation to the services that you have requested we carry out on your behalf, and we'll always ask for your consent beforehand, or if we are required to do so by law.
  • You can always get in touch to ask us what personal data we hold and to correct and update your data if anything changes. For an overview of your rights check out our Privacy Policy.
  • By checking the "Agreement and Consent" box you agree and give your consent for us to use your information for the purpose described.

We use cookies to ensure that we give you the best experience on our website. You can view what cookies we use and change your cookie settings at any time by following the instructions here.
We will assume based on your 'implied consent' that if you continue to use our website without changing your settings you are happy for us to use cookies.