Can you cancel an IVA?
Yes, but there is no simple cancel button and ending an IVA has consequences. Before approval you can withdraw, though you may owe fees for work done. After approval you can ask your supervisor in writing to end it, but you get no refund, creditors can chase what is left plus frozen interest and charges, and bankruptcy becomes a risk.
You can stop an IVA, but you cannot undo it. What you have paid is gone, most of it probably on fees, and the debts come back with the interest and charges that were frozen. Before you ask for an IVA to be ended, it is worth knowing exactly what happens and whether a smaller change would solve the problem.
Can you cancel before your IVA is approved?
Yes. Until your creditors have voted and approved it, your proposal is just an offer. Tell the insolvency practitioner in writing as soon as possible that you want to withdraw.
Check your agreement for fees. Citizens Advice says that if creditors reject a proposal you still have to pay the fees you owe the practitioner, which can usually be added to your debts. Ask what you would owe for work already done if you withdraw.
Remember that until approval you had no legal protection anyway. Withdrawing leaves you where you were, so have a plan for dealing with your creditors. See how to apply for an IVA for how the process runs.
Can you challenge an IVA after it is approved?
Only in a narrow set of circumstances and within a short time. You, a creditor who was entitled to vote, or the nominee can apply to court within 28 days of the creditors’ decision, on the grounds that the IVA unfairly prejudices someone’s interests or that there was a material irregularity in the decision process. The court can then revoke or suspend the approval. This is rare, involves the court, and needs legal advice.
“I changed my mind” or “I found a cheaper option” is not a ground for revoking an IVA.
How do you end an IVA once it has started?
Ask your supervisor in writing. Under the standard terms, the supervisor may issue a certificate of termination if you request it in writing, but can delay doing so until the administration of your IVA has been completed. The key facts document says to speak to your insolvency practitioner if you do not want to continue.
Before anything is ended, the Protocol says the supervisor should make sure you understand the impact, particularly that creditors can pursue you directly again and that you will be liable for interest and charges built up during the IVA.
What happens when an IVA is cancelled?
| What happens | What it means for you |
|---|---|
| No refund | The key facts document says you will not get back any money you have already paid. |
| Early payments mostly went on fees | Your debts may have fallen by much less than you paid in. |
| Creditors can chase you again | They are no longer prevented from pursuing the outstanding balances directly. |
| Interest and charges come back | You are liable for the interest and charges that built up during the IVA. |
| Bankruptcy is possible | The supervisor or any creditor bound by the IVA can petition the court for your bankruptcy if you have not kept to it. Only the court can make you bankrupt. |
| Your records | The IVA comes off the Individual Insolvency Register about 3 months after the Insolvency Service is told it has ended, but stays on your credit file for about 6 years from the date it started. |
For a bankruptcy order on a supervisor’s or creditor’s petition, the court must be satisfied that you failed to keep to the IVA, gave false or misleading information, or failed to do what the supervisor reasonably asked. Our guide to what happens if an IVA fails covers termination in more detail.
Is there a refund if the IVA was wrong for you?
Sometimes. The Protocol says that if a breach happens before your creditors have received any payment, the supervisor should review the case in full and record whether the IVA was the right solution. If it was not the most suitable debt solution, or there is evidence the breach was likely from the start, your payments should be refunded and the IVA ended.
If you believe you were sold an IVA that never suited you, you can also complain. See how to complain about your IVA.
Want to know whether an IVA could work for you? Answer a few questions about your debts and income. It takes about 3 minutes, and it is free and confidential.
What are the alternatives to cancelling?
If the problem is money, there may be a way to keep the IVA going and keep its protection:
- a payment break worth no more than 9 months of payments in total over the IVA
- a cut in your payment of 20% or less, without a creditor vote
- a variation agreed by creditors for a bigger change
- a settlement, if a breach looks likely to end the IVA
- paying it off early, in full or through a lump sum creditors accept
What if you cannot afford your IVA payments? explains each one, and paying off an IVA early covers lump sums.
Can you cancel an IVA and go bankrupt instead?
It is possible to move from an IVA to bankruptcy. The conditions the Insolvency Service’s adjudicator checks on a bankruptcy application do not rule out someone who is in an IVA. But the order in which things happen matters, so get advice before you ask for your IVA to be ended.
Things to weigh:
- Bankruptcy costs £680 to apply online, in full before the application is submitted, and the fee cannot be waived.
- It usually ends after 12 months, but if you own a home with equity the trustee can sell it or take a charge over it.
- If you have spare income you may be asked to make payments for up to 3 years.
- A debt relief order is only possible once the IVA has ended, and only if you meet the limits: debts under £50,000, less than £75 a month spare and assets under £2,000.
Compare the options side by side in IVA or bankruptcy? and read our full guide to bankruptcy.
What to do next
- Before you ask for anything to end, get a free, impartial view from MoneyHelper, StepChange, Citizens Advice or National Debtline. See where to get free debt advice.
- Ask your supervisor, in writing, what you currently owe each creditor, how much of your payments has gone on fees, and what would happen to any money they hold if the IVA ended.
- Ask about a payment break, a reduction or a settlement before you ask for termination.
- Read about the other legitimate ways out of an IVA, or go back to IVAs explained.
Common questions
Will I get my money back if I cancel my IVA?
Normally not. The key facts document says you will not receive a refund of any money you have already paid. The exception is a protocol IVA that breaks down before creditors receive anything and is found to have been unsuitable from the start.
Can my supervisor refuse to end my IVA?
The standard terms say the supervisor may issue a certificate of termination if you ask in writing, and can delay doing so until the administration of your IVA has been completed. It is not an automatic right to walk away.
Does cancelling take the IVA off my credit file?
No. The IVA stays on your credit file for about 6 years from the date it started, however it ends. It comes off the public insolvency register about 3 months after the Insolvency Service is told it has ended.
Can I change my mind after my IVA is approved?
Only in limited ways. You can apply to court within 28 days of the creditors' decision if there was unfair prejudice or a material irregularity. After that, the choices are to vary the IVA, pay it off, or ask for it to be ended.
Will I still owe the insolvency practitioner if I withdraw before the vote?
You may. Citizens Advice says that if creditors reject a proposal you will still need to pay fees you owe the practitioner, and the same can apply if you withdraw. Check your agreement with them.
Related guides
- Are there legitimate ways out of an IVA? The legitimate routes out of an IVA, what each one costs you, and the so-called loopholes to avoid.
- What happens if an IVA fails? How often IVAs fail, the breach process, what happens afterwards and the options that are left.
- Can you pay off an IVA early? The ways to end an IVA early, how a full and final settlement works, and what paying early does not change.
- IVA or bankruptcy? The differences explained How an IVA and bankruptcy compare on cost, length, your home, your job and your credit file.