The first thing to understand is that you have the right to leave an IVA just as you had the right to enter into it in the first place. You might be surprised by just how many people think defaulting on an IVA results in Bailiff activity, but this is not the case. In fact, the IVA company is obliged to comply with your request, though actually leaving one take around five months.
IVAs are of little use to those living in rented and holding down everyday jobs
IVAs are designed to protect significant assets such as property portfolios and businesses, not for everyday people. If you are in rented and holding down a regular job like the rest of us, bankruptcy is the answer. Amazingly, people on DLA and other benefits are also placed in IVAs when there is absolutely no chance of there being a monthly payment in bankruptcy.
There are reasons for this and it all comes down to money. IVA companies pocket the first two year’s contributions for themselves with only a trickle of money going to the creditors. Speaking of which, the original creditors would have long since sold the debt on to debt collectors and it is these companies that eventually receive a fraction of your monthly payment.
We often hear people say ‘we entered an IVA because we wanted to repay the debt’ but this is a fallacy. Once you have made the decision to leave, write a letter to the IVA company, stop paying it immediately and cancel any direct debit.
The procedure from here is that you will receive a letter of default after three missed payments, followed by a letter of termination roughly two months after that. You will need the letter of termination to show the Official Receiver when you enter into bankruptcy. Our speciality is taking people out of IVAs and into bankruptcy so call us for a chat.
‘How can I leave my IVA’ is just one of hundreds of questions we’ve answered over the years, but feel free to call us on 01425 600129 if you have any more questions or need bankruptcy help. We are here to help.