Are you struggling to meet your monthly IVA contributions?

An individual voluntary arrangement (IVA) is a formal and legally binding agreement between an individual and their creditors to repay their debts over a period of time most commonly by regular monthly contributions from their income. But what happens if you are in an IVA and your financial situation deteriorates?

Many existing IVAs will have been drafted under pre-pandemic economic conditions. It is unsurprising therefore that, in light of the current cost of living crisis, individuals may now find themselves unable to maintain the required monthly contributions into their IVA.

Earlier this year, the Insolvency Service issued guidance to insolvency practitioners (IPs) in relation to the supervision of IVAs, to the effect that IPs should consider requests from individuals who want to reduce their monthly contribution and, in appropriate circumstances, consider whether to seek completion of the IVA early based on contributions made to date.

If you are struggling to maintain contributions into an IVA, it is important to speak to your supervising IP as soon as possible. The options which may be available to you will depend upon the terms of the IVA. There may, for example, be the possibility of a discretionary reduction of the amount to be paid for a period of time, a payment holiday or the option to vary the terms of the IVA. It is important to remember, however, that the future viability of the IVA will ultimately need to be discussed with and considered by the supervising IP and thereafter any variation is likely to be subject to the further agreement of the individuals’ creditors. Note, however, that if your IVA was made under the IVA Protocol (a code of practice that all IPs and many creditors have signed up to), your supervising IP can reduce your monthly payments by up to 15% without having to ask your creditors.

The key is to liaise with your supervising IP and/or take legal advice at the earliest sign of difficulty to seek to avoid any default in payment and the ultimate failure of your IVA which could potentially have severe consequences (including ultimately your bankruptcy).

If you require advice on any aspect of personal insolvency, please contact Sarah Mower or John Bradshaw in our Insolvency & Business Recovery Team.

Sarah Mower is a chartered legal executive and specialist in Insolvency & Business Recovery at Barker Gotelee Solicitors.

For more information on our range of legal services, please call the team on 01473 611211 or email