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Life after debt

What happens at the end of an IVA?

Posted 25 October 2016 by Christine Walsh

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Make sure you know what will happen at the end of your IVA.

An Individual Voluntary Arrangement (IVA) is one way to get in control of your unsecured debts and get back on more secure financial footing. If you’re on an IVA and you’ve stuck to the rules and kept to your budget, then this is great news and you’re probably looking forward to the date when you’ll be debt free. 

But what happens at the end of an IVA? Is there anything you have to do to make sure that your IVA closes properly? This is what we’re going to explore in the rest of the blog. 


Your debt is written off

The best thing about the end of your IVA is that, as long as you have completed the solution successfully, the rest of your unsecured debt included on the plan is written off. This means that for the first time in a long time you will find yourself debt free (apart from any secured debts you may have, including your mortgage). 

The creditors have to stick to the rules of the IVA as well, and this means that they have to write off your outstanding debt as well as any interest and charges that may have built up over the years. They aren’t allowed to contact you for payment once it’s over. 


You’ll receive a Completion Certificate

When your IVA ends you’ll receive written confirmation of this - known as a Completion Certificate. It confirms you’ve completed the plan successfully and that your Insolvency Practitioner is no longer the Supervisor. 

It normally takes six-eight weeks for your IVA Completion Certificate to be sent out to you. It’s important that you do receive it, as your IVA is not officially closed until you do and any extra earnings you get may still need to be paid into the IVA if you don’t have it. 

We will also send a copy of your Completion Certificate to your creditors and they should then update your credit file to show that you’ve completed the IVA and the debts are settled. 

Your details will normally be taken off the Insolvency Register three months after the end of your IVA. 


You need to start rebuilding your credit history

Although you’ll probably be very happy that your remaining debts, interest and charges have been written off, it’s important to remember that your credit history will have been negatively affected by your IVA. Your IVA stays on your credit history for a minimum of six years and however long your IVA remains open. This means that if your IVA has lasted longer than six years for any reason, it will stay on your credit history for longer and until your IVA officially closes. 

If a company does a credit check on you, for instance because you applied to them for credit or for a service like a mobile phone contract, then they would be able to see that you’d had problems paying your debts back in the past. They may be less likely to lend to you because of this or provide you with a service. Or you may find that, if you are approved, you might have to pay a higher rate of interest. 

There are ways that you can start to rebuild your credit history and limit the damage. One way of doing this is to look into getting a credit card designed for people with a bad credit history. These are credit cards designed to help you if you want to show that you can borrow responsibly and make your repayments on time. 

It’s also important to make sure that you’re on the electoral register as this is one of the things that companies may look at when they credit check you. 


Is there anything that could delay my IVA closing?

There are some things that can delay your IVA from closing. If you have made a complaint about mis-sold PPI, it can sometimes take a while for that complaint to be processed and for you to find out whether you’re getting any money back or not. If you do get money back while you’re on an IVA, it needs to go into the IVA towards your debts. So if you’ve made all your payments to the IVA but you’re still waiting to hear back about PPI, this can delay it from closing. 

If there’s any other money that should have been paid into the IVA, for instance from overtime or commission, this will also stop it from closing. Having said that, it’s not likely that this will happen if you’ve kept us up to date with all the overtime, bonus and commission you’ve earned over the course of your IVA. We’ll always let you know if there’s anything extra you need to pay in before it gets to the time when your IVA is ending. 

If there is equity or any other assets due into the IVA, this needs to be dealt with before it can close. You are sometimes expected to remortgage and release equity into the IVA, and this normally happens six months before it’s due to end. Your debt solution provider will explain the whole process to you, including whether you need to remortgage and how this works on an IVA. 

Still have questions about IVAs? You can learn lots more about them on our dedicated page. If you’d like to speak to an expert about which debt solution is right for you, use one of the options at the bottom of the page. 

by Christine Walsh

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.