Can I cancel my IVA at any time?

Can I cancel my IVA at any time?

What is an IVA?

An IVA is a popular debt solution in the United Kingdom for individuals struggling with unmanageable debts. It provides a structured repayment plan, allowing debtors to regain control of their finances while avoiding bankruptcy.

Is it possible to cancel an IVA?

Yes, it is possible to cancel an IVA, but there are certain factors you need to consider before making this decision. Cancelling an IVA prematurely can have serious consequences and may not be the best course of action for everyone.

When can you cancel an IVA?

An IVA can be cancelled at any time during the term, but the cancellation process may vary depending on the specific circumstances. It is essential to consult with a licensed insolvency practitioner (IP) who can guide you through the cancellation process.

Partial completion of an IVA

If you have already made some repayments towards your IVA, you may have the option to partially complete the arrangement before cancelling it. In such cases, the IP will calculate the amount you have repaid, deduct their fees, and distribute the remaining funds amongst your creditors.

However, it is crucial to note that creditors have the right to reject the proposed partial completion, especially if they believe they would recover more through the IVA than through alternative debt recovery methods.

Consequences of cancelling an IVA

Cancelling an IVA can have severe implications on your financial situation. Firstly, your insolvency practitioner will likely charge for the services provided. These fees will be deducted from the funds you have paid into the IVA before distributing the rest among your creditors.

Additionally, your creditors may take legal action to recover the full outstanding amount once the IVA is cancelled. This can include applying for a bankruptcy order, petitioning for a County Court Judgment (CCJ), or forcing the sale of your assets through a charging order.

Alternatives to cancelling an IVA

If you are facing difficulties with your IVA, it is essential to explore alternatives before deciding to cancel. You can discuss your concerns with your insolvency practitioner, who may propose modifications to the IVA terms or offer alternative solutions that could better suit your circumstances.

Some possible alternatives include requesting a payment break, extending the IVA duration to reduce monthly payments, or considering a debt management plan (DMP) as a more flexible arrangement.

Conclusion

While it is possible to cancel an IVA at any time, it is important to carefully assess the consequences and explore alternative options before making a decision. Cancelling prematurely can have serious financial implications and may not be the most beneficial choice for your circumstances. Consulting with a licensed insolvency practitioner is crucial to understanding the potential outcomes and determining the best course of action for your situation.

Frequently Asked Questions

Yes, you have the right to cancel your IVA at any time. However, it is recommended that you speak with your Insolvency Practitioner (IP) before making a final decision, as they can provide you with information about the potential consequences and alternative options.

Canceling your IVA may have a negative impact on your credit rating. It is important to understand that an IVA already has a negative effect on your credit score, and canceling it could further worsen your credit history.

There might be financial penalties for canceling your IVA, depending on the terms agreed upon in your individual case. It is advisable to review your IVA agreement or consult with your Insolvency Practitioner to understand any potential penalties that may arise from cancellation.

If you are struggling to make the agreed-upon payments, it is important to discuss your situation with your Insolvency Practitioner. They may be able to propose alternative solutions or make adjustments to your IVA to accommodate your financial difficulties.

To cancel your IVA, you would need to contact your Insolvency Practitioner and inform them of your decision. They will guide you through the cancellation process and advise you on any necessary steps or paperwork that needs to be completed.