Deliberately fail IVA

Fletcher2012 Forumite Posts: 1 Newbie
Apologies if this has been posted before, I did look but couldn't find anything similar.

I've been in an IVA for over 6 years and due to unforeseen circumstances including illness and injury I have quite a few missed payments, several variations to allow these to be added on etc. As a result of this the IVA has been extended several times to the point where if I see it through to completion I'll have been in the IVA for almost 8 years. I didn't even think this was possible but the IVA company (not sure if I'm allowed to name them) say that it is. 

Hence the post title, I'm considering deliberately failing the IVA but would just like some clarification to a few points, the pros and cons of doing this and if anyone could advise it would be much appreciated.

My thoughts are this -  The IVA and original debts are all over 6 years old, they no longer show on my credit report, however the IVA is still showing on the insolvency register. My understanding is that regardless if complete or failed, it will be removed after 3 months but if I continue to pay for the next 2 years it will continue to be listed?

My credit rating is improving every month since the 6 year mark but I'm still finding it impossible to obtain car finance (I need a vehicle for work so this is essential), I assume as I am still listed as insolvent this is why I'm being declined. Also the IVA company are being awkward refusing to allow me to take car finance despite me paying over £400 a month into this IVA. I'm realistic and was looking to keep the finance payments to around £200/month so half of what I give to the IVA. They claim I can't use any part of that and need to prove how I will reduce my other budgets to pay for the car finance. Is this the truth?

If I did fail the IVA, would the original debts still be enforceable? This is my biggest worry. From research it looks like usually after this length of time they would be statute barred as they were all defaulted over 6 years ago. BUT does the fact I've been in the IVA change this? I can't really afford to make settlement offers to individual creditors. 

Apologies for such a long post but I hope it makes my situation clear. Any advice people could give on my situation would be very much appreciated :smile:


  • sourcrates
    sourcrates Forumite, Ambassador Posts: 27,657
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    How much debt are we talking about here, are you a homeowner ?

    Eight years is a long time under such budgetary restrictions, so in answer to your main question, if you failed the arrangement now, my understanding is that your debts would still be enforceable, they would not be subject to the limitation act because you have been making payments, albeit via an agent, your IP.

    There would likely be some reduction in the balances, although they may re-instate interest and charges that were previously removed, or they may not.

    There is the facility to make you bankrupt for a failed IVA, but that very rarely happens, the usual course of events is that collection activity would start again, once it had filtered through to creditors what has happened.

    Nothing would show on your credit files, and the IVA would vanish 3 months after failure, but you would be back to square one again.

    Is bankruptcy an option ? I`m guessing not, but it would be over in 12 months, and gone altogether 5 years after that, how do you feel about that ?
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing [email protected]. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- The "provit letter" is here-
  • fatbelly
    fatbelly Forumite Posts: 19,185
    Part of the Furniture 10,000 Posts Name Dropper Cashback Cashier
    Why don't you ask for it to be marked complete on the basis of existing payments?

    This is becoming more acceptable for IVAs that are more than halfway through due to the cost of living increases that everyone is experiencing.
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