Can my IVA fail?

Can my IVA fail?

Your IVA is a legal agreement, not only do all your creditors have to stick to the rules but you do, too. If you don’t meet your payments and other obligations listed in your IVA it could fail.

There are up to 8.3mn people in the UK struggling with debt, and an Individual Voluntary Arrangement (IVA) is one way to handle unsecured debts and also avoid bankruptcy. Most people find IVAs work out really well, and with up to 75% debt written off in some cases means debts can be cleared quicker. However, if you’ve signed up for an IVA it’s really important to keep up with your payments and all other contractual arrangements.

Your IVA is a legal agreement, not only do all your creditors have to stick to the rules but you do, too. If you don’t meet your payments and other obligations listed in your IVA it could fail. Failure to make regular payments and other situations that can also cause an IVA to fail are discussed below.


In the first instance breaking the terms of your IVA will lead to the issue of a breach notice. This formal letter advises you of how you’ve broken the terms of the agreement and how you can get back on track. There are several reasons breach notices are issued, including:

  • Missed payments – if you miss payments or fall 3 months into arrears with contributions to your IVA.
  • Failing to meet the reasonable requests of your IVA Supervisor – for example, if you don’t go ahead and sell an asset after originally agreeing you would do so.
  • Not paying extra when your earnings increase.
  • Failing to pay additional income from the sale of assets.
  • Taking out loans of £500 or more without getting permission from the IVA Supervisor, including loans from friends or family members.
  • Failing to provide the details required for your annual IVA review.
  • Failing to declare any additional, windfall income to your IVA Supervisor, including compensation, inheritances, or lottery wins.



There are lots of ways you can deal with an IVA breach notice, so it’s important to get in touch with your supervisor at the earliest opportunity to discuss the breach and put forward your proposals. Ignoring your breach notification is definitely not the way forward. Even if your circumstances have changed and your earnings level has dropped your supervisor can ask the creditors to make a variation to the IVA and accept lower payments than originally agreed.

If you receive a breach notice it will detail any problems and provide information about how you can get back on track. Failing to successfully deal with the breach will mean your IVA Supervisor will need to set up a meeting of creditors and this could lead to your creditors agreeing to terminate the IVA.

Most people fall into breach of their IVA due to worsening circumstances, so getting in touch with your IVA supervisor at the very earliest opportunity is one way you can actually avoid breach notices. Any kind of change to your personal situation should be notified at the time, and this is particularly the case if you cannot meet your contractual payments.

If your creditors refuse to agree to accept lower payments your IVA will fail.


Basically, if your IVA fails, the sum total of your debts will still be owing. This does mean that the creditors can pursue legal action against you. It’s also possible that your appointed insolvency practitioner will petition for bankruptcy if funds are held in the IVA. Alternatively, your creditors could take individual action to make you bankrupt.

If this happens you still need to pay your insolvency practitioner the agreed fees for all work carried out on your behalf.


If you’re worried your IVA could fail or have received an IVA breach notification, get in touch with the specialists at NDS to discuss all your options and find out what you can do. We’re the experts when it comes to dealing with IVAs and negotiating with IVA Supervisors.

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