An IVA may not be suitable in all circumstances.

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How Long Does an IVA Last?

An IVA generally lasts for five or six years. However, this can be increased or decreased. Here, we explain how that’s possible and what you can do about it.

How long does an IVA last?

An IVA will generally last for five years. However, with everyone’s circumstances being different, the length of this agreement can differ on a case-by-case basis.

For example, if you receive a windfall or have a positive change to your financial circumstances, you may be able to pay this off early. Read on to find out how to do this.

What is an IVA?

An IVA stands for Individual Voluntary Arrangement and is designed to help you get on top of your finances.

A hand crossing out 'Debt' on a document

It is an agreement with creditors to make payments in line with what individuals can afford to pay. An IVA can be preferable for both the lender and the debtor. The person taking out the IVA doesn’t have to file for bankruptcy and, in many cases, a creditor can recoup more of the debt through this agreement than with other solutions. You may even be able to write off any outstanding unsecured debts you owe on completion of an IVA.

Write off debt

How long does an IVA last?

As mentioned earlier, an IVA will typically last for around five years. This allows the creditors to recover as much as possible owed to them, yet repayments are affordable to allow the debtor to keep enough of their wages to cover their day to day living costs. Once the IVA completes any remaining unsecured debts are usually written off.

An illustration of a house and a calendar.

There are some circumstances where the duration of the IVA may increase. If you’re a homeowner, you may be required to remortgage your property during the final year in order to release your share of the equity if this is more than £5,000, based on certain criteria. If this cannot occur, however, your IVA may run for an extra year instead – meaning the IVA will last for six years as opposed to five. Your IVA may last longer if you have missed agreed payments or reduced the amount you pay each month, meaning that these were added to the end of the IVA. If you’re unsure how long your IVA will last, get in touch via our application form for a no-obligation consultation personalised to you.

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How to pay an IVA off early

If your circumstances change, and you’re able to afford more, you will be required to make increased payments to the IVA, which could result in closing your IVA early. There are also a couple of circumstances which can lead to you completing an IVA much sooner than expected:

1. IVA windfall

A piggy bank with icons around it.

The majority of IVAs have a “windfall clause”. This is when you unexpectantly receive a large sum of money, such as in the form of inheritance or a gift. In this situation, the windfall will typically be required to be paid into the IVA to go towards paying your debts. Depending on how much the amount is, you may receive enough to pay the IVA in full, which will be all your debts and the costs of the IVA, which would complete the IVA earlier than expected.

It’s also worth noting there are restrictions on what is classed as a windfall. For example, if you receive a redundancy lump sum payment this is subject to it’s own rules and you will need to contact your Insolvency Practitioner to discuss this.

2. Additional funds

A person giving someone a money bag

If you have a large sum of money available, for example a gift from a third party, you may be able to use these funds to repay your IVA sooner if you receive enough to pay the IVA in full. Alternatively, you can propose a ‘full and final’ offer to your creditors. This is where, instead of making the repayments, you offer your creditors a large lump sum.

If this proposal is successful, your IVA should complete early.