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What happens at the end of an IVA? article
What happens at the end of an IVA? article
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When you first enter into an IVA, the end of your arrangement can seem like a lifetime away and it can be difficult to imagine a life free of your debts. But it can be helpful to know what to expect when you exit your IVA and become debt-free.

So, what does happen at the end of an IVA and how can you rebuild your credit score after your arrangement has come to an end?

In this guide, we’ll explain everything you need to know about what happens at the end of an IVA.

What is an IVA?

Put simply, an IVA (Individual Voluntary Arrangement) is a formal agreement between you and your creditors to repay a fraction of your unsecured debts through affordable monthly payments.

Unlike other debt solutions, like a Debt Management Plan, an IVA can only be set up and managed by a Licensed Insolvency Practitioner who will divide the money to each of your creditors on your behalf and answer any questions you may have along the way to ensure you get the best possible outcome from your arrangement.

During an IVA, your creditors will also be prohibited from contacting you or taking legal action against you. This includes any ongoing legal action, such as a wage garnishment.

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How long does an IVA last?

The length of time it takes to complete your IVA agreement will differ depending on your financial situation but is typically five years (extended to six years if you have additional payments to make).

If you have the means to do so, you can also repay your debts through a lump sum which can help you exit your IVA sooner than the standard five-year term.

On the other hand, if for whatever reason you’ve failed to repay the agreed-upon portion of your unsecured debt by the time your IVA term is up, your Licensed Insolvency Practitioner will work with you and your creditors to draw up new terms and extend your monthly payments.

What happens at the end of an IVA?

If you are nearing the end of your IVA, you are probably wondering what happens next.

Make your final payment

First, your Licensed Insolvency Practitioner will ensure you have made your scheduled IVA payments and fulfilled your obligations as laid out in your proposal. When your final IVA payment has been confirmed, you will be informed that your IVA has successfully come to an end.

In some cases, you may have outstanding payments due if you had a payment break or additional months were added to your term at some point during your arrangement.

Receive a completion certificate

When your arrangement is complete, you will be issued an IVA completion certificate as proof.

On receipt of your completion certificate, you are advised to send a copy to each of the three credit reference agencies in the UK (Experian, Equifax and TransUnion) to allow them to update their records and ensure your credit file is accurate and up to date.

At this stage, your outstanding debt will be written off and you will be officially debt-free.

Check the Insolvency Register

Three months after your IVA ends, you must ensure your name has been removed from the Insolvency Register. This can be done by visiting the Insolvency Service website.

At this stage, you should also request a copy of your credit file from each credit reference agency to ensure it has been removed when it should have been.

If your IVA is still listed on your credit file, you must contact them and ask them to update your report accordingly.

Rebuild your finances

Once you have officially completed your IVA and your name has been removed from the Insolvency Register, you can start to work on rebuilding your finances.

It can take a number of years to get your credit rating back on track and your IVA will remain on your credit report for six years from the date it was approved but the sooner you start to make better financial choices, the sooner you can take steps towards financial freedom.

The disposable income you were contributing towards your IVA will also be freed up for you to do whatever you choose. Most people deposit the extra money into a savings account to put it towards day-to-day expenses.

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How can I improve my credit score after an IVA?

After an IVA, your credit score should gradually improve over time but there are still some steps you can take to rebuild your credit yourself. This can improve your chances of being approved for a mortgage, loan or even mobile phone contract down the line should you want to borrow again.

For example, if you haven’t already registered on the electoral roll, doing so can confirm your address and boost your score. If you have lived at the same address for a long period of time, this may also increase your reliability in the eyes of a lender and boost your chances of being approved for further credit.

It may also be wise to steer clear of making applications for credit in the first few months after you exit your IVA as this is only likely to damage your credit score further which can make it more difficult to bounce back.

Can I get a mortgage after an IVA?

Whilst it is not impossible to get a mortgage after an IVA, it can be challenging. Because of this, it is recommended to wait until your credit score has improved before you apply and consider applying through a specialist lender that has experience in working with people with a history of debt.

It is also worth remembering that whilst your IVA may no longer be listed on your credit file after six years, lenders may still ask you about your recent credit history and you will be obliged to disclose details of your IVA.

When it comes to getting a mortgage after an IVA, taking the time to wait until your credit score has improved can allow you to distance yourself from your poor credit history and access better deals. This can also give you more time to save for a larger deposit which will result in lower monthly mortgage payments.

Where can I get more advice on What happens at the end of an IVA? and other debt solutions?

To discuss your options and get the support you need to deal with your debt today, contact us now on 0800 0431 431 or click the button to get started

Maxine McCreadie

Maxine is an experienced writer, specialising in personal insolvency. With a wealth of experience in the finance industry, she has written extensively on the subject of Individual Voluntary Arrangements, Protected Trust Deed’s, and various other debt solutions.

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HISTORY

Our debt experts, and insolvency practitioners continually monitor the personal finance and debt industry, and we update our articles when new information becomes available.

Current Version

February 7 2023

Written by
Maxine McCreadie

Edited by
Maxine McCreadie