How long will my IVA last? IVA Issue
Summary: How long will my IVA last? This article discusses the expected length of an IVA (Individual Voluntary Arrangement) and highlights exceptions to the norm.
What factors can change how long an IVA lasts for?
- Is the date of retirement near for the person applying for an IVA?
- The age of person applying for an IVA?
- Special circumstances where the person applying for an IVA such temporary loss of job and so need to make the IVA last longer to make up for the gap in payments.
Can an IVA be extended to last longer or reduced to finish early?
An IVA repayment period can be extended if the creditor requires the term to be varied. One example of this happening would be if some IVA payments are missed and so have to be added on to the IVA. To extend an IVA the creditor must make a "Variation Order". A variation order is requested by the IVA Insolvency Practitioner.
Please note that an IVA lasts usually for 5 years. Every IVA is different and the length of time is dependent on the individual case. At the end of the period the balance remaining on the debts is written off by the creditors, and the debtor is completely debt free (subject to terms and conditions).
The advantage of an IVA is it allows you to pay back a proportion of your debts in a realistic time period and most importantly at a level the person can easily afford.
Why do IVAs last for so long?
The IVA creditors like an IVA to last longer because bankruptcy payments usually last for 3 year. The IVA creditors are writing off a lot of debt so want to see a five year commitment from the debtor.
Is there ever an instance where an IVA doesn't have to last so long?
IVAs can be for a much shorter time frame. There is a type of IVA that can last about 12 weeks. This is called a "Full and Final Settlement IVA". For example, some debtors have a friend, relative or third party that will assist by offering a lump sum of money in full and final settlement of the debts.
In return for a lump-sum payment the IVA creditors will actually agree to writing off up to 80% of the debts. The write offs are generally higher in lump-sum IVAs as the money is received quicker over a shorter period of time.