How Long Does An IVA Last?
Many of us can manage money well, but even the most organised financially can still be in debt. IVAs are a great way to help people clear debts within a short period of time. They’re considered one of the best when it comes to insolvency solutions.
One question often asked is how long an IVA will typically take to end. Whilst there might be similarities in when IVAs end, not all IVA journeys will end at the same time. There are a number of factors that influence how long they last, from lifestyle to the level of payments you can commit to.
An individual voluntary arrangement is worth considering when you need to clear debt quickly. This guide can help you learn more about IVAs and how to get the most out of them when you need financial assistance.
How Long Does An IVA Usually Last?
Where did IVAs come from? These were established in 1986, thanks to the Insolvency Act that stated that an Individual Voluntary Arrangement lasts anywhere between three months and seven years.
So when it comes to the question, how long does an IVA last? The answer is often, that depends!
The length of the IVA can be impacted when it comes to how well you can keep up with the payment. A lot of the IVAs available will usually advertise five years to complete as this tends to be the common length of time it takes for most.
The flexibility of the IVA is that you can make payments earlier to help pay them off early. Whether you decide to pay it off quickly or over a longer period of time is up to you.Check if you qualify
Can The Length Of An IVA Vary?
As mentioned already, this duration varies when it comes to how long an IVA can last. From a few months to a few years, it comes down to the individual’s financial circumstances and what that means for paying off the debt existing.
Can an IVA last for seven years?
The Insolvency Act of 1989 stipulates that the IVA can take seven years to pay off. Whilst it might not be common, you might be given debt advice that encourages you to pay it off over a longer period of time.
If it takes seven years, you’ll likely need to modify the existing agreement with your creditor. The reasons for the change might be a change in financial circumstances that require you to minimise the payments further.
Can an IVA last for ten years?
Whilst there may be a possibility with some creditors to provide an extension longer than seven years for an IVA, it’s not that likely to happen. It’s important to seek debt advice to make the best-informed decisions on your financial situation.
Debt can be a worry for many; it’s important to know that many organisations are out there willing to help those with money problems. Debt charities like Money Advice Service and StepChange exist to provide helpful advice.
Call us on 0800 464 7235
Our trained advisors are here to help, so if you think an IVA proposal is one of the best debt solutions for you, don’t hesitate to call us on 0800 464 7235 to speak to one of our trained debt advisors or click below to see if you qualify…Check if you qualify
What Happens After A Five-Year IVA?
If you do everything the IVA provider has outlined, you will likely pay off the IVA by the end of that five-year period.
Towards the end of your term and approaching the final settlement, you should receive the following services from your provider:
- Check all information is present and correct
- Present you with a certificate of completion
- Allow you to step away from your arrangement.
A certificate of completion is important to have as it shows anyone who queries it that you stuck to your payments as required. It also shows yourself and everyone else that you’re debt-free!
Be sure that your credit provider has delivered on all of the above when you’re coming to the end of your payment term.
How Long Can An IVA Last If I Am A Homeowner?
Depending on whether you’re a homeowner or not, this lifestyle position can affect the length of the IVA for most people. If you’re considering how long an IVA lasts in relation to being a homeowner, you might have to remortgage your property to increase the amounts you pay.
Of course, this may be influenced by how much equity you have in your home or lack thereof. Typically, if there’s more than £5,000 worth of equity in the property, then you will often be required to use the equity in your home to help pay off your IVA.
This requirement will only likely happen after the five-year mark. For homeowners where a remortgage isn’t possible, then your monthly payments may be extended for an additional year. That means your IVA will last six years instead of the typical five for most.
How To Pay An IVA Off Early
Everyone’s financial circumstances are different. Some are able to pay off their IVA early with a lump sum, whilst others need to push their term to the maximum where possible.
If you’re fortunate to be able to pay off your IVA early, then there are a couple of ways to do this. This is with an IVA windfall and additional funds.
An IVA windfall refers to a lump sum of money you received that was unexpected. This could be a letter win, a financial gift from someone or an inheritance from a loved one who recently passed.
If you’ve found yourself with this large sum of money during your IVA term, you will need to pay it towards your debts. This is stated with the Windfall Clause and will ensure that any debts are paid with this type of financial aid you’ve suddenly incurred.
If the lump sum of money covers the entirety of your IVA debt, you can clear the IVA early, bringing you peace of mind!
Additional funds can come from anything else that excludes a windfall. For example, you may have assets that you can afford to sell in order to cover those IVA payments and to pay them off fully.
These might not be enough to pay it off completely as a lump sum payment would, but it will certainly get you to the finish line sooner!
How Long Will An IVA Stay On My Credit File?
Many worry that an IVA will stay on your credit file for a long time, and whilst that may be the case, having the certificate is going to help in circumstances where you might need to borrow more money further down the line.
Typically, like many debt solutions you opt for, an IVA will stay on your credit file for six years. Any time where a credit report check is made, the history of your IVA and any other debt payments will come up.
Unlike some of the other debt solutions, an IVA is beneficial for your credit history. It shows any future lenders that you’re a responsible borrower and that you are able to make repayments on time with no issues.
It’s something that shouldn’t always be seen as a negative, especially as many loan providers offer loans under fewer restrictions nowadays. Evidence of your borrowing prior is always going to put trust in you as a person who has experience in borrowing.
Improving your credit rating is always a good practice to do, especially as it directly benefits your borrowing power and offers you more debt solutions as a result.
Where Go Get More Advice On IVAs
The Insolvency act is a good reference point when it comes to understanding IVAs. However, if you’re looking for debt advice depending on individual financial circumstances, then IVA Helpline can offer you plenty of guidance.
The IVA Helpline is a useful source of information that provides lots of advice on debt management solutions, the types of debt that can occur and the relevant options out there for you.
Whether you need to pay off unsecured debt or need help understanding a debt solution, IVA Helpline is here to help. You can check out their IVA online calculator to see if your debt qualifies.
An IVA is certainly a useful debt solution for those who feel they might find it useful. Its flexibility in payment terms and the benefits it has to your credit report is why many choose to utilise it when they’re in financial trouble.
Knowledge keeps you one step ahead; contact the IVA Helpline for any questions you may have about your debt and if an IVA is right for you.
Frequently asked questions
Does an Individual Voluntary Arrangement (IVA) ever end?
An IVA will typically last between 5-and 6 years, but there are those that can be extended up to several years if payments are missed. As a debt solution, it’s important to stick to the monthly payments where you can. It’ll also help by giving you a better credit rating if you only need the IVA for five years.
As a legally binding agreement, you’ll need to be accepting that you’ll have limited control over your money during this time.
What is classed as a windfall in an IVA?
A windfall in an IVA is a lump sum of money that you’ve received unexpectedly. This could be anything from inheritance to winning the lottery if you’re lucky! A lump sum could also be a bonus that you’ve received from work and therefore is also a payment that will need to go towards paying your IVA off.
Does an IVA stop bailiffs?
If you’re at risk of encountering bailiffs, an IVA can help to stop them from showing up. It is important that there are exceptions, such as student loans, child support, or unpaid court fines.
Your insolvency practitioners will be able to stop the action of bailiffs, and if you owe money for parking tickets or council tax, you can use an IVA to pay it all off.
What happens to my IVA if I lose my job?
There’s nothing worse than finding yourself out of a job, especially if you’ve got unsecured debt that needs paying off.
In a situation where your financial circumstance may change, losing a job, for example, you may be able to take a payment break from your IVA. You could stop your monthly payments for up to nine months, which would certainly alleviate the pressure whilst you search for another job.
It’s worth speaking to your creditors to see if this is possible and whether you can suspend your payments for the full nine months whilst you get back on your feet.