Length of an IVA
Summary: Length of an IVA - This article aims to provide a guide as to how long an individual can expect their IVA (Individual Voluntary Arrangement) to last, once it has been approved. It also details how a change in circumstances may affect the overall duration.
One of the considerations when deciding on which debt solution is most appropriate is the length of time that the arrangement will be in place. Bankruptcy, for example, will usually apply for a period of 12 months, thought this could be extended up to 3 years (or longer for the restrictions). An IVA generally lasts for 5 years (or 60 months), though this could be longer depending on the individual circumstances. It is unlikely, however, that it would be for longer than 6 years.
Should an individual's circumstances change during the period of the IVA, the Insolvency Practitioner (IP) acting as the supervisor for the IVA will reassess the situation and it may be that they draw up a new proposal for the IVA (an IVA Variation). This could be an amendment to the monthly repayment amount, or the length of the IVA, or both. For example, if an individual takes a drop in salary, the new proposal may lower the monthly repayment, and increase the length of the IVA. The variation will need to be put to all the creditors (in exactly the same way as when setting up the IVA) and creditors of at least 75% of the value of the debt will need to agree to the changes.
Should an individual receive a windfall payment during the term of the IVA, then they should first advise the IVA Supervisor. It may be that the windfall amount would be sufficient to pay the creditors a lump sum and finish the IVA early.
It is possible that if an individual owns their property and there is equity, the IVA could be extended by 12 months in lieu of the equity if it cannot be released to give to the creditors for any reason.
It is important to keep the IVA supervisor informed of any changes to circumstances, as it could affect the overall length of the IVA.