How long will my IVA last

You may be wondering how long your IVA will last. The usual length is 5 years – 60 months. However, in certain circumstances it could be longer. It is also possible to settle an IVA early.

Contents:

How long does an IVA last?

A standard monthly payment IVA will normally last for 5 years. You will have to make 60 monthly payments.

This length of time is not dependent on the amount you owe. It is the same whether your debt is £10,000 or £100,000.

After you have made all of your payments, your Arrangement is complete and comes to an end. Any debt left outstanding is written off. Your creditors can’t force you to pay this outstanding debt.

5 years is not a legal requirement. More recently, it has become common for creditors to insist on IVAs lasting 6 years. You will need to agree to this during the application process if required.

How long does an IVA last if you are a home owner?

If you are a home owner, the standard length of an IVA is still 5 years. However this period could extend depending on the equity in your property and your ability to release it.

As a home owner, one of the things you have to agree to if you want to do an IVA is to try and release equity from your property in the 5th year of the Arrangement.

If you have equity in your property but you can’t release it with either a re-mortgage or secured loan, then the requirement is ignored. However, you have to make an additional 12 payments instead.

If you are a home owner, your IVA can be extended by 12 months if you are unable to release available equity.

When could your IVA last longer than 5 years?

A monthly payment IVA will commonly last 5 years. However, there are some reasons why this time could be extended.

How long will your IVA last if you miss payments?

One of the most common reasons for your IVA to last longer than 5 years is if you miss one or more of your payments. Where this happens, one of the options is to add them to the end of the Arrangement. This will mean it will last longer.

Payment Holidays

It is possible to suspend your IVA payments if you have an unexpected cost or temporary fall in income. This is known as taking a payment holiday. However, any payments you miss in this way must be added to the end and so will make your IVA last longer.

What happens if you reduce your payments?

If your income falls, you might be able to reduce your monthly payments. However, to make up for the reduce amount you will pay overall, your creditors will expect your IVA to be extended for an extra year.

Can you pay your IVA early?

Once you are in an IVA it is possible to settle it early. This could happen if a third party is able to offer a cash lump sum to pay off the remaining payments in a single go.

The amount that the third party would need to pay is usually equal to the total of the remaining payments. So if your monthly payments are £250 and you have 3 years left, the amount required would be £9000 (£250 x 36).

The result of settling your IVA early is to significantly reduce the length of time it lasts.

There might be a number of reasons why you would want to settle your IVA early. Tow of the key ones are:

• You know you are due to get a windfall and you don’t want to have to pay it into your Arrangement.
• You want the freedom to increase your income without the worry that your monthly payments will go up.