What happens if you inherit money during an IVA?

An inheritance does not automatically disappear into your IVA, and it does not automatically stay with you either. What happens depends on its size and on how much it would take to pay your creditors in full. This guide explains the rule in the IVA Protocol 2025, works through examples, and covers property, timing and what happens if an inheritance is not declared.

What do the standard IVA terms say?

If yours is a protocol IVA (the standard form for consumer IVAs), the terms in effect from 1 July 2025 say:

You must tell your supervisor about it as soon as reasonably possible. The key facts document you received before signing puts it simply: if you “inherit some money, you must tell your Insolvency Practitioner”.

Three points are worth drawing out:

• “May claim” means the supervisor decides, applying the terms. It is not automatic, but a sizeable inheritance is likely to be claimed.
• The cap is the full amount of your debts plus costs, not the rest of your monthly payments. That is a much bigger figure for most people.
• IVAs agreed under older terms, or bespoke (non-protocol) IVAs, can word this differently. Read your own proposal.

You can read the standard terms in full in Annex 1 of the IVA Protocol 2025.

How much of an inheritance goes into the IVA?

The easiest way to see it is with examples. In each one, suppose that paying all your creditors 100p in the pound and covering the costs of the IVA would need £26,000 more than has already been paid in.

In the last case, the standard terms say no statutory interest is added on top of what your creditors were owed at the start, the IVA is treated as satisfactorily concluded, and the supervisor issues a completion certificate without needing another creditor vote. See paying off an IVA early and what happens at the end of an IVA.

Your supervisor will give you the actual figure for your IVA. It depends on the debts your creditors have claimed, what has been paid so far, and the fees still to come.

What if you inherit property or belongings?

The rule covers any asset, not just cash. A share of a house, a car, jewellery or shares are all after-acquired assets if they are worth more than £500.

Once the supervisor claims an asset, it becomes an asset of the IVA. Under the standard terms you hold it in trust for the IVA until it is dealt with, and you must get the supervisor’s written consent before you sell, charge or otherwise dispose of it. How it is turned into money, and when, is something to agree with the supervisor. It is still capped at what is needed to pay creditors in full plus costs.

Items that would be excluded in bankruptcy, such as household furniture and equipment needed for basic domestic needs, are excluded from the IVA.

If you inherit part of a home, see also what happens to your home and belongings in an IVA.

Does timing matter?

It can, so tell your supervisor when you first learn of an inheritance, not when the money arrives.

• If someone dies during your IVA, the standard terms cover assets you “acquire or receive” during the IVA. Even if probate takes months and the money arrives after your IVA would have ended, it may still count.
• If the IVA has already ended with a completion certificate before the person dies, the inheritance is yours.
• If you expect an inheritance before you start an IVA, tell the insolvency practitioner. The IVA Protocol lists “the possibility of receiving a lump sum settlement” as a sign that a protocol IVA is unlikely to be suitable. You may be better off looking at other options first: see debt solutions compared.

Can you refuse the inheritance or pass it to someone else?

Do not do either without speaking to your supervisor first. The standard terms require you to tell your supervisor about after-acquired assets and not to dispose of assets that are part of the IVA without written consent. Failing to comply with your obligations is a breach of the arrangement.

What happens if you do not tell your supervisor?

If your IVA is terminated:

• creditors can pursue the full balance of your debts again, and can claim interest and charges that were frozen during the IVA
• the supervisor or any creditor can petition the court to make you bankrupt, and the court decides
• the protection the IVA gave you ends, and you get no refund of what you have paid in

If you knew about an expected inheritance when the IVA was proposed and kept it from creditors, that can be more serious. Making a false representation, or doing or leaving out anything fraudulently, to get creditors to approve an IVA is a criminal offence under section 262A of the Insolvency Act 1986, even if the IVA is not approved.

See what happens if an IVA fails.

What people commonly get wrong

• “The IVA takes everything.” It can take only what is needed to repay creditors in full plus costs.
• “I only need to cover my remaining payments.” The cap is your full debts plus costs, not the payments left on your plan.
• “It doesn’t count if it arrives after my IVA ends.” If the person died during the IVA, it may.
• “Belongings don’t count.” Any asset worth more than £500 can.

What to do next

1. Tell your supervisor in writing as soon as you know about the inheritance, with the details you have: who died, the executor’s contact details and the likely amount.
2. Do not spend, transfer or refuse any of it until your supervisor confirms what they will claim.
3. Ask for a written figure showing how much is needed to pay your creditors in full plus costs.
4. If you want independent help understanding your position, free, impartial debt advice is available from MoneyHelper, StepChange, Citizens Advice and National Debtline: see where to get free debt advice. For other money questions, see life in an IVA and pay rises, bonuses and windfalls.