What if you cannot afford your IVA payments?

The worst thing you can do is stop paying and say nothing. The standard terms that most consumer IVAs follow give your supervisor several ways to help without a vote, but only if you tell them what has happened. The key facts document you were given says the same: if you can no longer afford your IVA, speak to your insolvency practitioner as soon as possible about reducing payments, a payment holiday or cancelling.

The rules below are the IVA Protocol 2025 standard terms, which apply to protocol IVAs approved from 1 July 2025. If your IVA is older or bespoke, check your own proposal.

What should you do first?

1. Contact your supervisor in writing, explaining what has changed, when, and whether it is likely to be temporary or permanent.
2. Send evidence, such as a letter from your employer, a benefit decision, or new bills. A payment break can only be agreed if the supervisor has full information about why you cannot pay.
3. Keep paying what you can while you discuss it. The Insolvency Service advises continuing your payments while you talk about alternatives, because stopping could put you in breach.
4. Do not borrow to cover the gap. Credit of more than £500 without your supervisor’s written approval is itself a breach.

What can your supervisor do?

Payment breaks

A payment break suits a short-term problem, such as time off sick, a gap between jobs or an unexpected bill. The supervisor can agree one without going to creditors if three conditions are all met: they have full information about why you cannot pay; the total missed over the whole IVA is no more than the equivalent of 9 months or 39 weeks of payments; and the IVA would need to be extended by no more than 12 extra months to recover what was missed, unless you make up the shortfall another way.

A lower monthly payment

If your income has dropped for good, or your costs have risen, your supervisor can reduce your regular payment by 20% or less without referring back to creditors. That limit is cumulative: it is measured from the original proposal, or from the last change creditors agreed. Payments are also reviewed every year at your annual review.

A variation

A reduction of more than 20% needs your supervisor to ask creditors to vote on a variation, which is a formal change to your IVA. You or the supervisor can propose reasonable variations, with your consent. In the first two years, a variation to reduce payments should only be proposed if there is evidence that the change in your circumstances could not reasonably have been foreseen when the IVA started. If creditors reject it, the IVA continues on its current terms.

A settlement

If a breach looks likely to end your IVA, the Protocol says the supervisor should consider whether to propose a settlement to creditors, under which the IVA is treated as satisfied but you make no further payments. It is not guaranteed, but it is worth asking about. If family can help with a lump sum, see paying off an IVA early.

What happens if you fall behind?

Under the standard terms, you are in breach if you are behind by the equivalent of three or more months’ payments and no payment break or reduction has been agreed.

1. The supervisor sends you a notice of breach.
2. You have one month to pay the arrears, propose how you will make them up over a longer period, or explain the breach if asked.
3. If you do, no further action is taken, although creditors may be told.
4. If you do not, or you say you cannot, the supervisor must issue a certificate of termination within 28 days, unless they decide to ask creditors to vary the IVA or to petition for your bankruptcy.

The supervisor should also look into why the breach happened. If it happened before your creditors received any payment, and the supervisor decides the IVA was not the right solution or the breach was likely from the start, the Protocol says your payments should be refunded and the IVA ended.

For what termination means for you, see what happens if an IVA fails.

When might another option fit better?

If your circumstances have changed for good, the IVA you signed may no longer be the right tool. It is worth getting an independent view before you ask for anything to be ended.

• Bankruptcy. It costs £680 to apply and usually ends after 12 months, but homeowners with equity can lose their home, and it has its own restrictions. Compare the two in IVA or bankruptcy?.
• A debt relief order. You cannot have one while you are in an IVA, but if the IVA ends and your debts are under £50,000, you have less than £75 a month spare and assets under £2,000, a DRO is free. See debt relief orders.
• A debt management plan. Informal and flexible, but creditors do not have to freeze interest or stop action.

If your IVA does end, the Protocol says the insolvency practitioner should point you to free, regulated debt advice. Remember that if an IVA is terminated, creditors can chase the balance again and add back the interest and charges that were frozen, and you get no refund. Our guide to cancelling an IVA covers this in more detail.

What should you avoid?

• Ignoring letters from your supervisor, especially a notice of breach. The one-month clock runs whether you open it or not.
• Borrowing more than £500, or using a credit card, to keep up payments without written approval.
• Cutting essentials such as rent, council tax or energy to pay the IVA. Those debts sit outside the IVA and have serious consequences of their own.
• Paying anyone who offers to get you out of your IVA for a fee before you have spoken to a free adviser.

What to do next

1. Write to your supervisor today with what has changed and what you can afford, and ask which option they suggest.
2. Redo your budget with your current figures. A budget planner can help you show what you can realistically pay.
3. Get a free, impartial second opinion from MoneyHelper, StepChange, Citizens Advice or National Debtline before you agree to a variation or ask for the IVA to end. See where to get free debt advice.
4. For other IVA topics, go back to IVAs explained.