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Finishing an IVA early
The normal duration for an Individual Voluntary Arrangement (IVA) is 5 years but in fact there are no restrictions on the minimum length of an Individual Voluntary Arrangement (IVA). The majority of Individual Voluntary Arrangements (IVAs) are expected to last for 5 years but the supervisor of the arrangement, usually an Insolvency Practitioner (also known as an IVA Nominee), can extend the term to 6 years and more rarely 7 years.
The length of an Individual Voluntary Arrangement (IVA) is dependent on your circumstances and if they change the term of your IVA may also change. There are two ways to finish an Individual Voluntary Arrangement (IVA) early either to pay it off or annul it by declaring yourself bankrupt.
The first way would be to repay of your debt early. This is not as uncommon as you may think especially for those who own a property with equity . If when your Individual Voluntary Arrangement (IVA) starts the equity in your property is not sufficient to clear your debt the Insolvency Practitioner will check its value annually so that any future increase in value can be considered.
Recently the value of property has risen steadily so potential to end an Individual Voluntary Arrangement (IVA) through a re-mortgage is increased. As the Individual Voluntary Arrangement (IVA) progresses the level of debt still owed reduces but equity in your property grows. There comes a point when the debt is sufficiently reduced for a release of equity to clear the balance . If releasable equity levels grow quickly Individual Voluntary Arrangement (IVA) terms can be substantially reduced.
Another way to pay off an Individual Voluntary Arrangement (IVA) would be through a windfall payment . If you are the beneficiary in a will or you win a sum of money the terms of your proposal state that you must contribute a percentage or all of that money to the creditors through your Individual Voluntary Arrangement (IVA). This is likely to mean that your Individual Voluntary Arrangement (IVA) will finish early if not immediately.
If your circumstances change for the worse and you are unable to pay your contributions any more your Individual Voluntary Arrangement (IVA) is at risk of failing. The Insolvency Practitioner is bound as the supervisor of your Individual Voluntary Arrangement (IVA) to declare you bankrupt if there is no prospect of you continuing to pay.
This is unfortunate because most people entering into an Individual Voluntary Arrangement (IVA) are desperately trying to repay there debt and chose an Individual Voluntary Arrangement (IVA) in preference to bankruptcy at the outset.